Gold as a safe haven in hyperinflation

In a hyperinflation, Buy physical gold Perhaps the best way to protect your assets. It is the easiest physical asset to trade that can be kept out of the reach of governments and banks. It is more liquid than art, not tied to a location such as real estate and land, and it is not traded on an exchange like stocks and bonds.

Gold is a form of wealth that you can really store completely outside the financial system, without currency risk and political risk. At the same time, gold is not a productive form of possession because it does not generate income. The value of gold therefore only becomes visible when confidence in central banks and governments disappears.

Hyperinflation in Venezuela, is gold the best safe haven?

Hyperinflation

The graph above shows in one overview what happens during hyperinflation, in this case in Venezuela. In just two years, the price of dollars and gold has risen 54 times, while the average price level has risen only 12.5 times, according to Oxford economists. Hyperinflation is also causing the prices of local stocks to rise, but much less than inflation.

In nominal terms, the stock market rises during hyperinflation, but in terms of purchasing power (dollars and gold), the value of stocks falls . That's because such a period of uncertainty also has a negative impact on the profitability of companies.

Fleeing to the dollar?

Gold is not the only safe haven in a hyperinflation. A relatively strong foreign currency, in this case the US dollar, is also proving to be an excellent safe haven for the time being. This also makes the US stock market a safe haven for wealth to a certain extent. To a certain extent, because the dollar is also a currency that can become worthless due to hyperinflation.