Let’s learn a powerful lesson from history:

Prior to 1918 Germany was the most advanced nation in the world.

When hyperinflation hit post WWI Germany, what used to be a comfortable nest egg was suddenly the value of a postage stamp.
Weimar Germany – in the 1920s – is a stark example of what can happen when banks resort to printing excess money.

In 1914, one US dollar could be bought with about four marks.

By 1923, it was ONE TRILLION marks to the dollar.

Most Germans were optimistic and completely unprepared when hyper inflation hit… They raced to spend their wheelbarrow-loads of cash before prices went up... Caught off guard, in a state of panic, tried to convert savings into real goods.

You could order a cup of coffee at a cafe for 10,000 marks, and the bill would be 12,000 when you left.

Remember... Five years earlier Germany was the most advanced nation on earth.

But this couldn’t happen here, today, in America... surely not?

But dismissing the threat of massive inflation in the next 24 months could be one of the worst financial mistakes you ever make.

Let’s look at how various asset classes performed during this hyperinflation:

1.Cash became almost completely worthless. Of all investments, cash is the worst in this environment. Those who held onto their cash too long soon found themselves burning it for warmth.

2. Bank savings were no better. Bank deposits became as worthless as cash.

However, after the stabilization the government decreed partial reimbursement, and sums in the range of 15-30% of the original deposit value were repaid. Don’t bet on that happening this time around. Today, banks ARE the problem.

3. Property was a good place to be if you had a mortgage. What you need to understand is that it’s possible property may halve within 12 months.

The huge deluge of inflation will hit after that. In Germany, inflation pretty much wiped out everyone’s mortgage debt.

After the German economy’s recovery, heavy new taxes and the urgent need for cash forced most holders to remortgage their property, often more heavily than originally.

In other words, their gains were an illusion. Many Germans were forced into selling property to raise cash. Rents were frozen by the Government, so landlords lost their income virtually overnight.

4. Suddenly, “things” were sought instead of cash.

People preserved wealth by converting cash into things with lasting value – rare coins, stamps, jewelry, furniture and works of art. Even standard items like clothing or kitchenware became valuable wealth-preserving assets.

5. How about stocks? Between January 1918 and November 1923, one German stock index share went from 126 to 23,680,000 million marks.

Fantastic for stock investors, right?

Wrong!

if you measure the German stock market during this period in US Dollars (at that time backed in gold)... the gain of 187,936 million times in marks amounted to a 60% loss in US dollars. Equities are a better place for your capital than cash itself during hyperinflation. But not that much better.

Who held on to their wealth?

The ONLY Germans who held onto their wealth were the intelligent minority who had the foresight to exchange marks for gold and ‘safe currencies’. This was done - before new laws made it difficult and before the mark had depreciated too much.

The Fed is creating new money at the fastest pace in history..

Gold currently trades for around US $1,100 an ounce.

Many analyst think it should reach $2,500.

Some analysts are picking $6,000 an ounce by the time this financial crisis has ended. That’s a huge gain on today’s price.

Gold is the only form of money that hasn’t been poisoned by the credit crunch. Confidence in fiat currencies is about to be decimated. When that happens, gold will become the most trusted currency.

Bob Tonachio, CEO of Robert James & Associates, Inc. may be contacted. At 1-800-530-5700 or rjaadmin@bellsouth.net. His firm charges no fees for advice and consultations are always confidential and free of charge. www.robertjames.us is an educational website with the ability to view live lowest cost, spot market gold and silver trading in London, New York and Zurich 24 hours per day.

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