Profiting from hyperinflation

[Pornstar]

A few years ago Zimbabwe had an inflation rate of 11 million percent. Many people are predicting that the US will soon experience hyperinflation. That got me thinking - how can you profit from hyperinflation? Is it as simple as opening an FX account and buying the AUDUSD? That seems logical...buy $1,000 worth at 1.06 and in a few years sell it at 100,000 when the USD is practically worthless in comparison to our currency.

Is it that simple or am i missing something?

 

[Fire]

I suggest you do your maths again.

How many AUD will you get for $1060 USD under such a scenario?

 

[Clay Davis]

Tangible stuff. Real estate and metals.

 

[Hornberger]

You need to short sell USD or borrow money in USD and buy assets in AUD.

 

[Mister Dog]

I would recommend buying USD right now if you want a quick 15-20% ROI in the next 6 months.

As soon as the RBA lowers interests rates in Australia the AUD will plunge 10% in a day.
Guaranteed.

Buy USD NOW!

 

[Pornstar]

When you buy the AUDUSD you are short selling USD and using the funds to buy AUD. So when you buy this FX pair it will increase in value when the USD depreciates. Therefore if the US goes into hyperinflation this pair should go through the stratosphere, especially when you buy the instrument on 100:1 margin. $1000 worth should be $10 per 'pip' (0.0001) so a 1c movement from 1.0600 to 1.0700 should make a net profit of $1,000.

So, buying $1,000 worth of AUDUSD at 1.06 and cashing out when the pair goes to say 10.00 (1 AUD = 10 USD, which would be a very conservative estimate if the US went into hyperinflation), the profit should be about $894,000.

Seems to easy and too profitable, something must be wrong with my logic. I guess it would be that the FX provider is the market maker and they would be the ones copping the loss of $894,000. So i suppose they would go broke pretty quick.

 

[Hornberger]

Just how does any Australian buy AUD?

 

[vealesy]

Get a job?