How to use gold to protect against fiat currency collapse

Gold Investing Strategies

How to use gold to protect against fiat currency collapse

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If you’re wondering why your Dollars or Euros are buying less and less every day, you need to understand what fiat currencies are, how they work, and how to protect yourself against the problems they have.

In the past, money used to be backed by something, usually gold or silver. If you had a dollar, you could take it somewhere and exchange it for a bit of gold or silver. Unfortunately, at some point, every nation’s leader realizes that they want to spend more than they actually have in their vaults. So they switch to a fiat currency.

A fiat currency has value only because someone (usually the government) says it does. Everyone agrees on its value because they trust the government that printed it. However, what happens when the government can’t be trusted?

Once a country’s leader disconnects the value of their currency from anything like gold or silver, they are free to do whatever they want with it. They can print an endless supply for bailouts, government spending programs, wars, and whatever else they can dream up.

After a while, you end up with inflation. If there are more dollars printed, and the same amount of goods exist, prices start to go up. It’s simple supply (over-supply of dollars) versus demand (the same amount of demand for goods). When this happens, any money that you have saved loses its value.

This is part of the reason why the dollar has lost 95% of its value over the last hundred years.

Eventually, all fiat currencies “go to zero” and lose all value. This happens either through hyperinflation or through default.

So how can you protect the money you’ve saved up from losing all of its purchasing power?

The answer is to have less cash saved up, and own more hard assets, like gold and silver.

If you follow the market, you can say that the price of gold has increased. Alternatively, you could flip that around and say that the value of the dollar has decreased against gold (which would be more accurate).

By converting your cash to assets, you have the ability to sell them later, after hyperinflation or default has passed. The people who saved their dollars in the bank will find that they are now worthless. However, your hard assets will have generally held their value in the new currency.

To give you an example of the value of assets, versus fiat currency, there’s an old story about a man who was taking a wheelbarrow of cash to buy his daily groceries. On his way to the store, he was robbed – not of the cash, but of the wheelbarrow.

The great thing about buying gold as a means to protect against currency collapse is that it is universally recognized and is a very compact way to store your wealth. In case things get extremely bad, you can easily transport your gold (and wealth) across a border and get a new start in a new country.

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Tags: • hyperinflation • inflation • dollar • currency • gold • buying gold • new currency • hard assets • government spending • fiat currency • how to • price of gold • gold and silver •

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