Preparing for Hyperinflation

Imagine a situation in which no-one wants to hold any fiat currency. Trust in the financial system has evaporated. The whole world is in a state of hyperinflation. How do we go about our day to day affairs? How do we get food on the table?

In such a situation, there will be an urgent need for an alternative medium of exchange.

The alternatives to fiat are gold, silver and crypto, and many are convinced that it is crypto that will be the preferred medium of exchange. However, I seriously doubt that this will be the case.

Imagine being in possession of valuable resources in a world where fiat has lost its purchasing power. What would you demand in exchange for these resources? Would it really be something as vague and intangible as crypto? Wouldn't silver or gold be a better trade?

I live in Portugal where they still have grocery stores at the corners. The logistic distance from me to a farm is short. The green grocer at the corner knows the farmers that deliver the produce. We regularly buy eggs directly from a farmer who comes in to town every now and again.

I doubt that these farmers would feel comfortable with crypto in exchange for their products. A silver coin on the other hand would be readily understood and appreciated.

However, I only have gold bars and wafers. I don't have any silver coins. How do I trade with the green grocer and the farmer selling eggs?

There are at least two ways I can do this. I can buy an option for a tremendous amount of supply from these people by handing them a gold wafer. That would involve trust. However, I see no reason why they would not honor their commitment and let me draw from their supplies until my quota has run dry.

Alternatively, I can go to a coin store and buy silver coins for my gold. During hyperinflation, no-one dealing in silver or gold will accept fiat. However, they will accept gold.

This means that I do not have to hold silver coins before I need them. I can always buy them with my gold when or if hyperinflation hits.

The trick to prepare for hyperinflation is not to hold all the different types of coins and bars that may be needed, but to hold currency that can be converted. Gold is the primary currency. It will always be accepted.

For those worried about hyperinflation, there is no better way to prepare than to hold gold or silver. Crypto is more likely to be a huge disappointment.

While we know for sure that gold and silver will keep and even improve their purchasing power during periods of inflation, the same is fare from certain for crypto. The prudent preparatory position is therefore to hold metals rather than crypto. Merchants will for sure accept our gold and silver. If they will also accept crypto is anybody's guess.

By Reserve Bank of Zimbabwe - Self-scan by (Marianian) followed by minor Photoshop enhancements to improve appearance and reduce size. Second version scan by (Camp0s) with original color preserved. Transferred from en.wikipedia to Commons by User:Avicennasis using CommonsHelper., Public Domain, Link