The US is headed toward hyperinflation, and within five to 10 years it could have inflation rates of 10 to 20 percent, said Marc Faber, editor and publisher of the Gloom, Boom & Doom Report. "In every society, when you have large fiscal deficits combined with easy monetary policies ⦠the likelihood that you will have high inflation is very, very high," Faber said. "And it happens very quickly." These numbers rise so speedily because the government "massively" understates the country's rate of inflation, Faber said. To get a true reading, he said, people need to ditch core inflation numbers and include CPI in their analysis. "Itâs a lie what they publish," said Faber. "If you underweigh education costs, and if you underweigh health care costs, then you come to a totally different result." In such a volatile market, Faber said the safest place to invest is in equities or assets. "I'm not very bullish about real estate prices in the U.S., but I'd rather be in real estate than in 30-year U.S. bonds." http://www.cnbc.com/id/31450173
If you believe in deflation then you should buy gold according to Marc Faber. How would gold perform in a deflationary global recession? Initially gold could come under some pressure as well but once the realization sinks in how messy deflation would be for over-indebted countries and households, its price would likely soar. Therefore, under both scenarios - stagflation or deflationary recession - gold, gold equities and other precious metals should continue to perform better than financial assets." http://www.ameinfo.com/134334.html
He also recommends holding it outside of the U.S. as he thinks it will be confiscated here. Gold did well in the '30s as a safe haven because banks were allowed to fail and they were openly pushing inflation as a solution in newsreels. If the dollar is destroyed, holding gold will help at least preserve purchasing power, if it doesn't get confiscated. However, there are probably safer hard assets to own that will not attract the same kind of attention from the USG.
"However, there are probably safer hard assets to own that will not attract the same kind of attention from the USG." In your opinion," what would these safer hard assets be"? Best Regards Johno
All these prognostications are pointless. It's sort of the investor's survivalist fantasy. Some people stock up on guns and food cans and build a bunker and train in guerilla warfare. Others spend their entire time thinking how to hedge themselves against all kind of doom scenarios. It's pretty much pointless, no one can predict the future. If you are a trader and are profitable , you are already somewhat hedged, if you have a stable job or business income even more so. If you have lots of money, buy stuff that you will use personally , houses, land, where you can grow crop if you are the survivalist type. Buy some physical gold and silver if you want, 5-10% of porfolio. Buy what you like valuable art, jewelry. Vintage cars, wine, guns, collectibles. Stuff that you will use and that will appreciate if only silghtly over time or give you years of pleasure. Don't buy into the mania and panics. And be a trader, take advantage of mania and panics .
I am still trying to decide. Real estate is a possibility, but it is more likely to be taxed heavily if the local/state governments need revenue, which they probably will. Non-bullion precious metals (jewelry, industrial) might also be a good possibility. "Junk silver," i.e.. pre-1964 U.S. 90% silver coinage might be an option. This would likely be much more practical for barter than gold would be. Platinum, palladium, rhodium might not be confiscated. Any kind of business dealing in recession-proof merchandise that is not locked into long term price contracts. The final answer may depend on how much money you are trying to protect.
Let's clear this up.... Once upon a time there was a $70 Trillion economy.....the sum of all major assets marked to market combined with levered allowances.... Over $30 Trillion was removed.... This leaves $40 Trillion to price all items.... ..................................................................... The inflationist viewpoint is that somehow not only the $30 Trillion is replaced....but also added to .... Breaking even is 70/70.... Deflation is below 70.... Inflation is above 70..... ................................................................................ This does not mean that oil cannot increase in price....It does mean that prices overall are further contrained by the 40.....loss of 30.... ................................................................................. ie 100 unit condo Price....2000....$100 Price....2006....$150 Price....2010....$85 Who is going to buy the 150 ? If the govt. buys one....who buys the rest ? ............................................................................. In order to suggest either inflation or deflation.....one needs to define the source of $.... For above 70/70....where is it ? For below 70/70....where is it ? ............................................................................ The big numbers.... Real Estate Debt labels Equity labels If big numbers are needed....then govts. worldwide could assist in paving the way for them to be born.... ie tax free universal world wide exchange....all items....70 becomes very small.....universal accounts....wiki data base.....best distribution....most efficient capital.... Done....
Libertad, that is a good analysis. The problem now is that the debt overhang, which was excessive even in a 70T economy, still largely exists in the 40T economy. This debt level is not sustainable. Most of it needs either to be liquidated (defaulted on) or inflated away. In the 1930s liquidation happened by banks and institutions failing. Depositors who were unlucky enough to do business with failed banks lost their money. However, we live in an entitlement society today where this is not permitted to happen. There is going to be a huge default, and they know it. They are going to try to manage it in a way that it is as politically palatable as possible in order to preserve the interests of the ruling elite. This probably means creating a national emergency and blaming it on foreigners somehow. One way or another, you are not going to be able to protect your money by keeping it in conventionally safe investments like MMFs and CDs. The money that Ma and Pa savers think they have is really the end of a long debt chain that is coming apart. The system has to suck it back in one way or another. You will have to be very clever to preserve the present purchasing power of that money.