What to Do When Facing Severe Currency Devaluation

by Reg Wannamaker

In 1945 after World War 2 in Germany, it took a wheelbarrow full of German deutschmarks to get a loaf of bread.  However, if you had a silver coin you could get several food items!  Could we ever face a similar crisis in our own lives?

Jeff Clark wrote an interesting article worth considering in our uncertain times:

Of the hundreds of inflation stories I've heard of in the past year, the most incredible is the one coming out of Vietnam.....

Vietnam is experiencing every problem that causes a rush into precious metals....inflation is an incredible 27%, interest rates are over 8%, the stock market was down every day in May, and employment has more than doubled (from 2% in 07 to 5.1% this year).  Household wealth is drastically declining.

Now here's the interesting part:  How are the Vietnamese people reacting to all this?  Did they buy stocks? real estate? Maybe inflation priced securities? Or did they just sit on cash?

None of the above.

Vietnam's economic and monetary problems have sent it's people fleeing to gold.  Not gold stocks.....but physical gold bullion.  They're hoarding it and hiding it from their government. Only about 10% has been deposited in banks (which actually pays 2.5% interest on gold). The remaining 90% is likely under a mattress or hanging around the owner's neck.

The trend toward gold is spilling into other financial areas.  After a long period of quoting land prices in Vietnamese dong (the nation's currency), landlords are now setting prices in gold in order to avoid the devaluation. Many believe gold will become the trend.

Although these things don't apply to us, it's good to know what is happening in other parts of the world and what could happen here if the world crisis deepens. It's good to consider some kind of preparedness plan.  Gold may be out of reach for the majority of us but silver is a good alternative - one ounce coins or rounds (Canadian maple leaf is a good choice). They are easy to store and handle and should be included in any preparedness kit. Current cost (July 2008) for a one ounce maple leaf silver round is $23.00. Three years ago it was $12.00.