Many people believe gold is an investment product that can ward off inflation. And indeed, history proves gold will be hired in case of panic that could endanger the country’s economy, such as high inflation, financial crisis, or war.
Inflation is rising prices of goods and services in general. Inflation can eat away at your money. If the assumption of inflation of 15 percent / year, then the price of goods & services that are now worth Rp 5 million, will be USD 10.06 million, or twice in year 6, and $ 15.3 million or three times in year -9, and so on.
According to severity, there are three types of inflation:
1. Moderate inflation, ie when inflation rate was just under double digits per year (under 10 percent)
2. Malignant inflation, ie when the inflation rate is in double digits per year (10 percent – 99 percent)
3. Hyper inflation, ie when inflation is in triple digits per year (100 percent or more)
This paper will discuss about what you can do to deal with inflation. If you are not among decision makers in government, you probably can not come down the level of inflation. All you can do as individuals, is just how you can take ‘advantage’ of the occurrence of inflation. How do I? I suggest that you invest in instruments that will increase rapidly in the event of high inflation. What is it? Gold.
When Japan invaded China during World War, the Chinese people panic and they flocked to the gold rush so the price of gold rose extraordinary. In Indonesia, during rush staples at the supermarket on January 8, 1998 (early morning before the Budget announcement by President Suharto in front of the Parliament), the price of gold also jumped directly. In the interval of one or two days, gold prices went up by about 1.5 times. And these prices, although volatile, tend to rise and hold at that time – before it finally fell further when inflation is back under double digits.