What to Do When Not If Inflation Gets Out of HandJeff Clark Raising prices is one thing. I understand raw-ingredient price rises will be passed on.But underhandedly reducing the amount they give you thats another thing entirely. It just doesnt feel honest. Youve noticed, Im sure, how much gasoline is going up. Food costs too are edging up. My kids college expenses, up. Car prices, insurance premiums, household items a list of necessities I cant go without. Regardless of ones income level or how tough life might get at times, one has to keep spending money on the basics. (This includes ice cream for only some people.) According to the government, were supposedly in a low-inflation environment. What happens if price inflation really takes off, reaching high levels or worse, spirals out of control? Thats not a rhetorical question. Have you considered how youll deal with rising costs? Are you sure your future income will even keep up with rising inflation? Be honest: will you have enough savings to rely on? Whats your plan? Its not that people wont get raises or cost of living adjustments at work, nor that they will all neglect to accumulate savings. Its that the value of the dollars those things are in will be losing purchasing power at increasingly rapid rates. It will take more and more currency units to buy the same amount of gas and groceries and tuition. And ice cream. Im not talking science fiction here. When the consequences of runaway debt, out-of-control deficit spending, and money-printing schemes come home to roost, its not exactly a stretch to believe that high inflation will result. We need a way to diffuse the impact this will have on our purchasing power. We need a strategy to protect our standard of living. How will we accomplish this? I suspect you know my answer, but heres a good example. Youve undoubtedly heard aboutthe drought in the Midwest and how its impacted the corn crop. The price of corn has surged 50% in the past two months alone. Commodity analysts say the price could rise another 20% or more as the drought continues. When you extrapolate this to other food items and virtually everything else you buy its very liberating. Think about it: gold continues its safe-haven role as a reliable hedge against rising inflation. I believe that those who save in gold will experience, on average, no cost increases in the things they buy and the services they use. Their standard of living would not be impacted. I think this kind of thinking is especially critical to adopt when you consider that supply and demand trends for gas and food dictate that prices will likely rise for a long time, and perhaps dramatically. So how much will you need to make it through the upcoming inflation storm and come out unscathed? Like all projections, assumptions abound. Here are mine for the following table. Im assuming that: Gold sales, over time, capture the gain in gold and silver so that your purchasing power is preserved. (This doesnt mean I expect to sell at the top of the market; I expect well be selling gold as needed if gold has not itself become a widely accepted currency again.) We pay taxes on the gain. This will decrease our net gain, but there should still be gains. In the famous Weimar Germany hyperinflation, gold rose faster than the rate of hyperinflation. To calculate how much well need, I looked at two components, the first being average monthly expenses. What would we use our gold and silver for? From corn to a house payment, it could be used for any good or service. After all, virtually nothing will escape rising inflation. Here are some of my items: groceries, gas, oil changes and other car maintenance, household items, eating out, pool service, pest service, groceries and gas again, eating out again, vitamins, movie tickets, doctor appointments, haircuts, pet grooming, kids who need some cash, gifts, and groceries and gas yet again. Groceries include ice cream, in my case. How many ounces of gold would cover these monthly expenses today? And dont forget the big expenses broken air conditioner, new vehicle, vacation and I really dont think my daughter will want to get married at the county rec hall. How many ounces of gold would I need to cover such likely events in the future? The point here is that youre probably going to need more ounces than you think. Look at your bank statement and assess how much you spend each month and do it honestly. The other part of the equation is how long well need to use gold and silver to cover those expenses. The potential duration of high inflation will dictate how much physical bullion we need stashed away. This is also probably longer than you think; in Weimar Germany, high inflation lasted two years and then hyperinflation hit and lasted another two. Four years of high inflation. Thats not kindling thats a wildfire roaring through your back yard. So heres how much gold youll need, depending on your monthly expenses and how long high inflation lasts. Every corn-based product on the grocery shelf will soon take a lot more dimes and dollars to buy. But wait what if I used gold to buy corn? Of course many of us own silver, too. Heres how many ounces wed need, if we saved in silver. I know these amounts probably sound like a lot. But heres the thing: if you dont save now in gold and silver, youre going to spend a whole lot more later. What Ive outlined here is exactly what gold and silver are for: to protect your purchasing power, your standard of living. Its like having your own personal financial bomb shelter; the dollar will be blowing up all around you, but your finances are protected. And the truth is, the amounts in the table are probably not enough. Unexpected expenses always come up. Or you may want a higher standard of living. And do you hope to leave some bullion to your heirs? Its sobering to realize, but it deserves emphasis: if were right about high inflation someday hitting our economy Most people dont own enough gold and silver. If you think the amount of precious metals youve accumulated might be lacking, I strongly encourage you to put a plan in motion to save enough to meet your familys needs. You can support this information by voting on Reddit HERE We have top recommended dealers in BIG GOLD, ones weve vetted that are trustworthy and have highly competitive prices. We also recommend a service that will deduct whatever amount you chose from your bank account and buy bullion for you automatically. And now, given how concerned weve been about the inflation thats coming, weve actually started our own service. You can check it all out in the current issue of BIG GOLD, risk-free. I can tell you that purchase premiums are incredibly low, due to a proprietary system that bids your order out to a network of dealers that compete for your business. Were already using it, and the response from other investors has been tremendous. 