Jim Rickards: Getting Rich Is EASY, Especially During Inflation (How to Make Money During Inflation)

what's the best way to protect your wealth right now and uh probably what are some of the things we need to look out for going forward as far as growing our wealth and uh you know really making the best of this crisis and this wealth transfer that we find ourselves in sure um and I that's that's a great question and I i' like to start with a a real quick story uh go back to 1922 the uh German wyar Republic hyperinflation and that's that's a well-known story everyone knows what happened we don't need to recite that but there was an individual at the time and his name was Ugo stinis and I talked about this at the end of chapter 6 uh sorry the end of chapter five of my book uh the new Great Depression uh Yugo Stines uh saw the hyperinflation coming and he went out and before it hit and borrowed all the rice marks he could that was the currency of the time and he invested in hard assets he bought coal steel shipping assets railroads Etc then he just waited and here comes the hyper super hyperinflation well he paid back all the debts I'd like to say he paid Pennies on the dollar but it was a millionth of a penny on the dollar they they were sweeping the currency down the sewers but he went through the exercise of paying back his debt with this worthless currency and he kept the assets he was the became the richest man in Germany and I don't speak German but his his nickname was the inflation cor which means the inflation King so the point of the story it's a true story you look up l in this the point of the story is even in the greatest hyperinflation in the history of developed economies in the history of the world this guy became the richest man in Germany because he saw it coming and he did the right thing so the point I make to investors is that you're not helpless uh hard we're we're in hard times they may get worse in some ways but you don't have to curl up in the ball there's always something you can do to go out and at a minimum preserve wealth and even better prosper and and make some money so let's get specific about that the first thing and I hate cliches this is going to sound like a cliche but but it's important to explain what it means is you need to have diversification now that sounds obvious every economics teacher will say you have to diversify your assets but people don't really understand it I've run into investors and they say well I'm highly Diversified I've got 30 separate stocks in 10 sectors I've got semiconductors consumer non durables utilities you know Etc and I go no you're not you're not Diversified you may have 30 stocks but you have one asset class it's called stocks they go up together and down together and you're not protected at all so by all means have have a slice in stocks that's fine but um have uh I I recommend a significant slug of cash people go well cash has no yield and why would you have cash Etc but cash first of all if we have deflation not inflation cash could be your best performing asset because the real value of cash goes up in deflation your money is worth more even though there's no yield uh because it has more buying power but more to the point here's what's not well underst cash has has embedded optionality if you're the person right now visibility is poor we don't know exactly what's going to happen I have a forecast but uh you know you got to really constantly update it but as as visibility improves and we can see who's going to win the tug of war between deflation inflation if you're the person with cash you can pivot you maybe you want to buy more gold because here comes the inflation or maybe everything ends well and you want to buy more equities so well you can do that if you have cash if you throw all your money in private equity um and you decide that's not such a good bet uh you know good luck getting your money back from Henry kravis I mean's he's a great private Equity manager but he's not going to give your money back early you're stuck so it's it's a good idea to keep some cash and Reserve beyond that um you know some Alternatives you know some room for private Equity room for Venture Capital um uh I I highly recommend residential real estate in what I call goto locations let me just explain that briefly right now we're seeing in the United States I don't doubt you're seeing it in in Victoria and Melbourne and elsewhere um people are getting out of the Cities I mean cities have always been a trade off on the one hand there's noise and pollution a certain amount of crime and high taxes and all that but on the other hand you have museums and cultures and great restaurants and and there's a lot of Buzz and people find it very attractive and on balance people have accepted the tradeoff they say like I'll take the excitement of the city despite the inconveniences and they've always been Magnus for talent uh you know lawyers Bank ERS artists writers um other professionals actors Etc um but now what's happened is we've got all the disadvantages at least in the United States um you know the the dirt and noise of pollution worse murder rate in New York has doubled suicide rates have tripled drug abuse is up you know Etc so we have the disadvantages are worse but the benefits are gone the museums are closed Broadway is closed uh you know Etc so people are just getting out of the Cities um and so residential real estate in places like Los Angeles New York uh San Francisco Seattle elsewhere and I dare say mbour are actually collapsing but they say where are they going in the United States they're going to Miami uh Nashville Tennessee Austin Texas Boise Idaho Phoenix Scottdale and some other kind of magnet cities um and and so uh so basically residential real estate in the places that where people are going Miami is red hot right now Phoenix red hot Austin same thing so they're good opportunities there commercial real estate forget it uh it's nowhere near the bottom probably wouldn't even look at it for maybe another year um and then finally uh gold I recommend 10% gold uh you know people I talk about gold all the time and people always want to put words in your mouth and they go well Jim mord says sell everything and buy gold I've never said that I don't believe that I you know it's not the end of the world we'll get through it we'll muddle through uh but 10% gold yeah that's that's a good piece to have it it's your inflation protection obviously uh it's also if it's physical gold it's a non-digital asset if it's gold minors it's it's it's a leverage bet so you can make even more money um but people don't understand that gold does very well in deflation you know in 1929 to 1933 the longest period of sustained deflation in US history gold went up 75% from $20 an ounce to $35 an ounce there's for that's going back to what I said earlier governments get so desperate in deflation that they devalue the dollar and raise the dollar price of gold to get inflation so so gold ends up being the vehicle to break the back of deflation which they have to do so gold does well in just about every state of the world in conclusion as we navigate the complexities of today's economic landscape the wisdom of historical experiences guides us towards sound wealth protection strategies the story of Hugo stinis during the wymer Republic's hyperinflation serves as a powerful reminder that even in the face of economic challenges strategic decisions can lead to wealth preservation and prosperity diversification takes Center Stage as a misunderstood yet crucial aspect of building a resilient portfolio genuine diversification goes beyond superficially spreading Investments and our exploration has shed light on what it truly means to safeguard wealth the often underestimated role of cash emerges as a key player offering not only stability during times of deflation but also the flexibility to Pivot as economic conditions Evolve Real Estate and strategic locations venture capital and a calculated allocation to Gold round out a comprehensive approach to wealth management as we confront the uncertainties of the financial landscape these insights aim to empower investors to make informed decisions whether they're protecting existing wealth or seeking opportunities for growth the path forward may be uncertain but armed with knowledge and a diversified strategy investors can navigate these Waters with confidence and resilience if you found value in today's insights and strategies for protecting and growing your wealth don't forget to show your support by giving this video a thumbs up your likes and comments are not only appreciated but also contribute to spreading valuable Financial knowledge for more content on navigating the intricate world of Finance wealth management and economic insights make sure to subscribe to our Channel by subscribing you'll stay updated on the latest analyses and Strate IES to help you make informed decisions in these Dynamic times thank you for tuning in and we look forward to having you as part of our growing Community until next time stay informed stay empowered and stay ahead in your financial Journey subscribe now for more invaluable content and I'll see you in the next video