How do gold and silver perform during hyperinflation and a currency reset?

The answer might surprise you.

One of the most famous examples of hyperinflation is Weimar Germany following World War One. Starting in 1918, the costs of goods and services rose so quickly that by 1923, people required wheelbarrows of cash just to purchase everyday items.

Let’s look at the cost of a loaf of bread in fiat currency, silver, and gold at the beginning and the end of this hyperinflationary period so we can better understand how each of these assets performed under the circumstances.

In November 1918, a loaf of bread could be purchased for one German mark, Germany’s fiat currency. The same loaf of bread could also be purchased for about one-fifth of a one-ounce silver mark, or 1/100 of a one-ounce gold mark.

In November 1923, just five years later, that same loaf of bread cost roughly 200 billion marks. Imagine, in five years in 2029, paying $400 billion for a single candy bar here in the United States. That’s the equivalent of how much purchasing power was lost during this time period.

But what about gold and silver? During the same time period, a one-ounce silver coin rose in value from roughly five marks to half a trillion marks. When we look at inflation and make the comparison, in 1918, that one-ounce silver coin could buy you about five loaves of bread. In 1923, five years later, it could buy you about two and a half loaves of bread.

Silver retained value well enough that it could be used for daily purchases, but it underperformed from what most people would have assumed. And don’t get me wrong. Many would have done anything to be in that position. It literally allowed people to survive.

But the people who maintained real wealth and real power were the ones who held gold. One ounce of gold in 1918 was worth about 170 German marks, or 170 loaves of bread. By 1923, that same one ounce of gold was worth 87 trillion German marks, which was the equivalent of 435 loaves of bread.

Now remember, during that same time period, silver rose to half a trillion German marks versus gold, rising to 87 trillion marks. What many people don’t realize is that gold and silver move together until they don’t. The gold to silver ratio chart shows the relationship between the spot price of gold and silver. Another way to think about this is it shows how many ounces of silver can be bought with one ounce of gold.

Obviously, gold has always been worth more than silver, otherwise, the ratio here would be 1 to 1. But we see significant jumps of gold outperforming silver, especially during these hyperinflationary times.

Brazil in the late 1980s to early 1990s underwent a severe hyperinflationary crisis, with the annualized rate of inflation peaking at over 2,000%. This led to multiple currency resets because they continued to fail to stabilize the economy.

During this time period, silver and gold soared. Even at the end of 1993 to 1994, in a one-year period, silver jumped 1,000,000% compared to the currency. Gold jumped 1,000,000.3% in just a one-year period.

So why does gold outperform silver in these situations? It’s because gold is the primary currency metal. It’s the same reason that central banks are buying gold in record quantities right now and holding it in their reserves because should a currency reset occur when the reset happens and there’s a reevaluation, it will be against gold.

Unlike paper fiat currencies, gold and silver are resistant to inflation and hyperinflation because they derive their value differently. Fiat currencies such as the U.S. dollar can be eroded at any time by an increase in the supply of currency in the economy. This results in each unit of currency having less value.

By contrast, gold performs well in these hyperinflationary situations because there is a finite amount, its value can’t be eroded in the same way.

Listen, it’s one thing to understand how gold and silver perform during a currency reset, and it’s another thing entirely to understand how to use your gold and silver in the hyperinflationary stages leading up to the reset, and in a post-reset environment. Because there are different types of gold and silver all around the world.

Most people don’t realize that they all can serve different functions for specific concerns or goals. During a crisis, for example, the questions that people ask me are how do I protect the existing wealth that I already have so that when the dollar collapses, my assets and retirement don’t collapse with it? How do I sustain my quality of living standards during the multi-year process of hyperinflation and the reset before the economy stabilizes again? How do I position myself for opportunities after a reset, like buying real estate and land at bargain prices to grow long-term wealth? And another one I hear is how do I leave a legacy for the people or causes I care about long after I’m gone?

All of these questions have been built into ITM Trading strategy to assist clients from start to finish. The key to understanding here is understanding the different functions of the many types, dates, quantities, and qualities so that you can achieve your goals.

An example of how different metals can have different functions is bartering versus paying off property taxes. You wouldn’t use an expensive gold coin for bartering, because silver would be a much more realistic option for that function. You also wouldn’t be buying land or property with a truck full of silver because it wouldn’t make any sense.

You need different products for different functions because during this time period you would be your own bank. Aside from understanding the many different product nuances, each person’s strategy will be different because no two people’s financial situations are the same.

Someone might have $100 million of wealth to protect while someone has $100,000. You might have $500,000 worth of debt while someone else is debt-free. Understanding risk and exposure. Understanding your specific goals and concerns are what will allow us to create a custom strategy that makes the most sense for you.

Most of our analysts have been studying gold and silver data, along with currency, life cycles, and economics for over 30 years. I am in awe of their knowledge each and every day.

If you’d like this entire process simplified or customized for you, there’s a link in the description below where you can click and call us for a no-cost analysis to help get you started. There’s no time like the present to take action, and there’s no better feeling than knowing that your wealth and your assets will last a lifetime or beyond.

Thank you so much for joining. Until next time. I’m Taylor Kenney with ITM trading. Your trusted source for all things gold, silver, and lifelong wealth protection.