Hedge Against Inflation?

The word hedge in this context basically means "to protect against" or in other words to give you a back up plan in case there is inflation of your currency.

As to gold being a hedge against inflation. The very general idea is that as your country's currency loses some of its value, its purchasing power, both domestically, and in relation to international currencies, gold does not. The value of gold may at times go down, but if you owned it and there was inflation, you wouldn't be losing money.

Overly simplified numerical example...

Say $1 can purchase some bread and gold is worth $100.
Inflation makes it so now you need $1.02 to buy the same amount of bread. The instantaneous increase of gold's value would now be $102.
So, if you owned gold, you just protected, or hedged, yourself against the negative impact of inflation

I don't like to have a bunch of dying dollars, at any one given time, crazy to say eh? I prefer to have my money tied up in commodities, like Pm's, vintage collectibles, something I have a REAL good chance to at least break even, or make some here an there when need be in time....

If you buy 10 items at 100 dollars each over 6 months, then sell all 10 and simply breaking even, it is not always a bad thing. Hard to put a price on 1000 bucks when you need it, even though I always try to make some profit to beat out shipping, paypal, ebay, stay afloat, etc....

It is like my own version of a bank eh. I buy many things at an affordable price for example, via estate sells or low bid running auctions on ebay, say 10 dollars up to 4 or 5 hundred often for many different things. When I want to get a large payday, I will put those hard to find items up for sale in one large lot. Most of the time is to high for anyone to buy short of a dealer looking to re-stock shelves or something, and it gets no bids. Like one I have up right now buy it now 2100. I add things to it, new pictures an items over a 10 day auction, an when you get like say 5 to 10 watch lists added, an say 3 to 4 hundred views in a 7 to 10 day auction, you know the buyers want it....

Next (In the first auction I update an say save up for the mini lots if the large one gets zero bids, very key IMO), I break that large lot up into 3 or 4 lots, making it more affordable an OBTAINABLE by a larger number of collectors, an clear out the shelves. When I have a real good pay day, I first square up any minor debt or bills, then buy more gold. Then I simply repeat the process.....

I started with 76 oz. of silver, then moved it all an turn what I could into 2 oz. of gold, which I have no interest in selling, just adding too the stash....

I call this the Goldhawk hedge, lol....

the idea is that gold tends to keep its purchasing power. Do not think if it as dollars per ounce, think of it as gold per purchasing unit.

IE picture this fake example:

Say you could buy a house 30 years ago for x amount of gold, and now you could also buy a house for that same amount of gold. This would mean that gold's purchasing power is the same as 30 years ago.

Meanwhile the same house went from $30k to $90k in dollars. This would mean the dollar lost its purchasing power.

So gold maintained its purchasing power much better than the dollar.

This is entirely fictional but you hopefully get the idea. There's plenty of research out there with real numbers should you care to do the research.

Thank you very much. That makes it much easier to understand. I guess now I have to go digging for some gold! Now where did I leave my shovel...

"Now where did I leave my shovel..."

Lol, an don't forget the pan....

Watch the first episode to a new season of Gold Rush Tonight on Discovery, and you will see yo need much more than a shovel to find gold...