How Will Hyperinflation Affect The Property And Stock Markets?
June 14, 2010 by Bob Livingston
How will hyperinflation affect the property and stock markets? I live in New Zealand and in the process of buying two properties in the U.S. both with 30 percent or more gross returns. I have also purchased shares (on your recommendations-mainly gold companies)
I believe the Feds have temporarily staved off hyperinflation with the big infusion of money they have thrown into the system over the last year and half. But don’t be fooled. The house of cards will eventually collapse–I think three to five years down the road. When it does the Fed will raise interest rates over and over in its bid to stave off hyperinflation. As a result, people will no longer be able to afford to take out mortgages to buy property (and just providing for their families will take precedence over buying property). Property values are low right now because of deflation; they will drop further in hyperinflation because of rising interest rates lessening demand. By the way, there is some thought that the reason oil prices have not spiked even though off-shore production has been halted in response to the ongoing spill in the Gulf of Mexico is due to a deflation of commodity prices. The deflation precedes the hyperinflation. I still see a bull market in commodities
I expect the stock market to lose 40 percent to 60 percent of its value. I would stay away from the stock market except for gold, silver and platinum mining stocks. Accumulate gold and silver and commodities.