Guide to Investing in Gold & Silver by Michael Maloney

Author:Michael Maloney
Language: eng
Format: epub
ISBN: 9781937832759
Publisher: RDA Press, LLC
Published: 2015-11-18T16:00:00+00:00

SCENARIO #3: BIG INFLATION

If Bernanke were to achieve what I believe his true goal is—creating enough inflation to bring the real estate bubble in for a soft landing—this would require a much accelerated rate of inflation and real estate would experience an invisible crash, just like the Dow crash of 1966-1982 we talked about in previous chapters, as it reverts to an undervalued asset class. Under these conditions the price of real estate will stay flat or slowly rise. The expansion of the currency supply would be enormous compared to today, and the result would be that all other asset classes would rise faster than real estate, including, and especially, gold and silver.

Under big inflation all investments appear to rise, but many actually fall in value. This is simply due to the fact that while your investments might be returning 10 percent, the dollar would be inflating at 20 percent. Effectively, that would equate to a loss in value of 10 percent. That’s why it pays to understand inflation and how it is the silent economic killer. In a situation like this, your best investments would end up being precious metals and commodities, because their prices would rise as the dollar inflated, and debt leveraged investments such as real estate, because you could borrow money at or below the cost of inflation, which means borrowing now and paying back with cheaper dollars later.

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