Why should you include some cryptocurrencies in your portfolio? There are dozens of reasons, but here are three of the most shocking …
Reason #1. Zimbabwe. I’ve never set foot in Zimbabwe, but it doesn’t take a rocket scientist to understand how severe inflation must be for a country to resort to issuing 1 TRILLION bank notes.
It wasn’t that long ago that Zimbabwe suffered through 11.2 million percent inflation. Yup, 11,200,000%!
Reason #2. Venezuela. In the last year, the inflation rate in Venezuela reached 25,000%. That’s not a misprint — 25,000 freaking percent! Inflation for the month of May alone was 110%.
For a Venezuelan citizen, that would be like a bag of groceries that cost $15 a year ago now costing $3,960.
The International Monetary Fund says that Venezuela’s inflation is going to continue, predicting that consumer prices will soar another 14,000% this year.
Where are Venezuelans going to flee this hyperinflation? No surprise to me; they are dogpiling into Bitcoin like there’s no tomorrow.
Reason #3. Argentina. The Argentine peso is worth one forty-seven-trillionth of what it was worth in 1940.
How about recently? The Argentine peso has lost 50% of its value so far this year. Ouch!
That could never happen here, right? Not to that extreme. But inflation in the U.S. is accelerating. The latest Consumer Price Index (CPI) shows that consumer prices marked their biggest increase in six years.
The pace of inflation is not yet earth-shattering. But it’s the trend that counts …
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The increase in the cost of living was spearheaded by increases in gasoline, medical care and shelter (both rent and mortgage prices).
Inflation on the wholesale level — the Producer Price Index — is rising even faster. It hit 3.1% in May.
And that uncomfortably high increase in wholesale inflation was echoed by a National Federation of Independent Business, whose members reported that their input prices are at the highest level since 2008.
Moreover, our country is importing inflation from overseas. Import prices are up by 4.3% over the last year. And that number should go even higher as trade wars and retaliatory tariffs kick in.
As you know, interest rates are also on the rise: The Fed is expected lift rates at least twice more this year.
No, the United States is not Zimbabwe, Venezuela or Argentina. But over the years, the U.S. government has made a few of the same mistakes they made. So, we may also see some of the same consequences.
How can you protect yourself and even position your portfolio to profit from rising inflation?
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Inflation Protection Tool #1: Cash. Cash doesn’t pay much and it’s boring … until you really need it. Plus, cash won’t drop in value when the stock market falls. Think of cash as an option to buy stocks when they get cheap. And a bargain isn’t a bargain unless you have the cash to take care of it.
Inflation Protection Tool #2: Physical Gold. Gold thrives in many environments, most of which are unfriendly to everything else you own. Think inflation, geopolitical uncertainly, U.S. dollar weakness and a total collapse of confidence in paper currencies. Plus, nothing beats gold as a reliable storehouse of value.
There are many ways to invest in it, and the person who I think knows more about gold investing than anybody on the planet is Sean Brodrick. His free weekly articles provide invaluable, mandatory reading.
Inflation Protection Tool #3: Digital Gold. I’m talking about cryptocurrencies. Digital gold has several advantages over physical gold, and it should be part of your financial survival kit. Unlike physical gold, cryptocurrencies are secure, private, can’t be confiscated by governments, and can be easily wired across international borders.
What do you think? Come over to our Weiss Ratings Twitter feed and join the conversation!