Hyperinflation and Gold

in #gold2 months ago

Hyperinflation is a term used to describe a fast and uncontrolled growth of prices in the economy. While inflation is a natural phenomenon describing the gradual growth of the prices of goods and services, hyperinflation is anomalous and can reach up to 50% per month.


Hyperinflation is described as an extreme case of money depreciation that makes the regular concepts of price and value meaningless. This description stresses the threat that most people imagine when they mention hyperinflation.

What would happen to the gold price under such conditions of uncontrolled increase of consumer prices? We can use the example of the hyperinflation in Germany after the First World War. During the period of stabilization that lasted for six months in 1920, one ounce of gold was worth 1,400 marks. Just three years earlier, it was worth just 100 marks. Yet, this quadruple growth was nothing compared to what was still to come.

By July 1922, the German mark had fallen to 300 marks for one US dollar; by November, it was 9,000 marks for a dollar; and by January 1923, the exchange rate reached 49,000 marks. By July 1923, one dollar was worth 1,100,000 marks, and by November, 2.5 trillion! And when the exchange rate was 1 trillion marks for a dollar, an ounce of gold was worth 20 trillion!

Some investors think that the higher the price of gold, the richer they become. This isn’t true. In 1920, an ounce of gold traded for 1,400 marks – and went up to 20 million three years later. Someone who had been far-thinking enough to buy gold before the crisis would have become a multimillionaire very quickly.

How would you have spent all that money? Before starting financial planning, one needs to eat. Yet, in 1923, one had to pay 200 billion marks for a loaf of bread and 50 billion for a cup of coffee.

If you own gold and hope that its price will grow once hyperinflation kicks in, don’t expect to become richer than you are now. A higher price of gold will only compensate for the loss in the US dollar’s purchasing power. However, you will save your fiat savings from complete depreciation, and that can be more important than getting rich.

Website : https://gold.storage/

Whitepaper: https://gold.storage/wp.pdf

Follow us on social media:

Telegram: https://t.me/digitalgoldcoin

Steemit: https://steemit.com/@digitalgoldcoin

Reddit: https://www.reddit.com/r/golderc20/

Bitcointalk: https://bitcointalk.org/index.php?topic=5161544