Hmm... Maybe I should print my own money!
As most of you know, I've been continuously hoarding precious metals and and I've stepped up the pace lately.
I came across this link and it gave me an idea. I can create my own money! Not that I would really do this in real life, because of the obvious counterfeiting risks, acceptability, etc... But then I realized that in inflationary times, people would want my money more than the US dollar! Which means that as my currency circulated over and over again, my metals are still in my possession.
Here's what I would have to do. First I would need to create my own exchange rate. I would need a program that other people could regularly see on my website that updates itself. I would need notes that are payable in the US dollar value of grams of metals. Platinum, Gold, Silver, Palladium and even Copper and Steel. I don't currently invest in copper or steel, but I would have to do this during inflation or I wouldn't be able to buy small ticket items. (Probably wouldn't be many small ticket items during inflation anyway.) I would also convert directly to the underlying metal for a fee. This has to be a fee that would give me a profit. I would need a guarantee, but along with a couple of banks, I deal with a local credit union and I know the president of the CU pretty well. I'm pretty sure that I can get him to give me a letter that he would honor my currency up to the total amount of the accounts I have with him.
Now I do business with enough people that I'm sure a few of them would take my currency today. As inflation sets in, I'm sure a lot more will take it. Of course, I'm gonna play up the inflation aspect and explain the advantage of having an inflation hedge. I can avoid the costs aspects, of liquidating metals early, by maintaining a higher cash percentage before inflation skyrockets. Once I've generated confidence, a unique thing will happen. First the people that have my currency will want to hold onto it. That means that my metals are still in my possession. I've esentially bought things on credit with zero interest. That will compound as people realize that my cash is better than the government's. I can buy things at a profit if people want to convert to metals.
The biggest thing is that I can unwind my position fairly easily in this scenario. First I have to seperate my metals to commited and non-commited. The commited metals are a zero-sum game. (Other than the obligations I've converted to metal at a profit.) They aren't exactly a zero sum game, because some of the money will never be tendered. Once I'm positive that inflation is in a tumble, The first thing I want to know is the percentage of my commited metals. Once I know that, I sell 50% of my non-commited metals and take the proceeds and buy the metal double shorts. I have a huge amount of time to covert the rest if inflation tumbles slowly. If it doesn't tumble at all, I sit and wait. I'll be ahead of the game unless I missed the boat and we still have inflation. Between my metal conversion profits and my zero percent loans, I have already profited in a scenario that should have been difficult. I'll be unable to unwind a certain amount of metals, but I can even unwind that amount with an advertisement in the newspaper with a deadline. I'll realize profits for the unconverted currency at that point.
No matter what, my position will be a thousand times easier to unwind than the guy that is 100% precious metals. On my commited metals, if I don't do anything, I'm not taking the loss, they are!
If I could just control the other risks, I'd do this in a heartbeat!
Happy investing everyone!