Is there any good research out there on this subject? It's extremely difficult to find anything showing that those who held onto metals during times of hyperinflation faired quite well when compared to those who held on to their cash.
Nobody fares well during hyperinflation.
Inflation destroys heavily capitalised businesses which run on a large base of expensive fixed assets, since they are unable to make enough reinvestment to meet replacement costs and depreciation. Quality of goods and services deteriorates since people resist price rises less when they come in the form of lower quality. That means organisations hire less productive and more dishonest staff for the same pay, employ poorer materials for roughly the same running costs, conduct shabbier production processes for the same working hours, use poorly maintained, worn out, and outdated equipment to run production, and sell poorer quality products to anybody who buys from them.
The fact that organisations are unable to replace machinery means that workers have to work overtime for the same pay to make sure that they continue to meet current level of demand at reduced productivity. Any extra hand that ever gets hired is done so temporarily. Everybody else ends up without work. Anticipation of future inflation and uncertainty means that businesses sit on more cash on hand without spending or investing it.
So you personally having gold or silver probably means nothing, when the food you buy is rotten, when the fuel in your car has poorer mileage, when stores are crowded with fewer staff to attend to you, when roads are bad, when power cuts are frequent, when teachers at your child's school spend more time on strikes than on work, when the garbage doesn't get taken out, when there are fewer garbage bins in the city and more filth on the streets, when you have to work longer for less, when you have to put off fixing the window or the leaking ceiling and live in shabbier conditions in your home just to have enough for the future.
Your only luck in having gold and silver is having less of your financial assets wiped away, but the scarce resources of land, capital, and labour would remain just as scarce, and have only ended up redistributed towards the government and misallocated by it.
You having gold or silver makes you marginally better than everybody else.
If it comes to hyperinflation, lead might be an even better investment.
If what you both say is true, why do people invest in it with the intention to preserve their wealth in the event that the legal tender of their country goes bust? Are precious metals just an overhyped asset?
Overhyped or underpriced depends on your preferences, but it's a great way to be independent of monetary shocks in our fiat system. You'll be able to afford expensive real assets when nobody else can.
I personally buy gold and silver to save up to pay cash for a zero energy home with a low maintenance garden and its own water supply system. (Basically an "earthship" without the environmental recycling BS, with the goal of being independent of failed state policy.) I will not buy until an average house goes for 1-1,5 kilos of gold or 15-20 kilos of silver and will probably spend double that when that happens.
In the next months I will start buying food and water for storage and maybe even one of those machines to make water out of air if the price goes down enough for one with solar panels attached for maximum independence. I'd also buy farm land and guns/ammo if the laws in Belgium weren't so twisted by the farming lobby and the anti-gun lobby respectively.
Last but not least the few ancaps in Belgium are planning to group together in real crisis situations and I will probably take some more sailing lessons as leisure with the side benefit that it opens up the North Sea as an escape route (and free supply of fish) if living in the highly populated Belgium becomes too untolerable under hyperinflation.
Other than this I don't really know what else I could do. Overall I think we ancaps have a huge advantage over the rest of the population as at least we'll understand the real source of the problem, so we won't loose our money buying back into fiat money when there are temporary deflationary periods etcetera.
"If what you both say is true, why do people invest in it with the intention to preserve their wealth in the event that the legal tender of their country goes bust? Are precious metals just an overhyped asset?"
I think what you also want to look at is about what happens after the hyperinflation is over. Many people speculate (and hope) for a new monetary system which is based in precious metals and if that is the case the demand for them will increase immensely. Moreover, even if there will be another fiat currency following that, PMs will still most likely retain their value all over the world. Agriculture would of course be a very good investment idea as well, but beware of price ceilings that could in short-term push agricultural products down (even though we all know that in the end price ceilings will be very bullish for any market good).
Prateek Sanjay: Nobody fares well during hyperinflation.
Owners of printing presses fare quite well actually.
I take it there isn't really research into how well people who held metals faired during times of hyperinflation?
Mike Maloney has written a book on the topic. He's a huge silver bug.
Edit: And there's "The end of money", a boot on Weimar Germany. It used to be on mises.org but last time I checked I did not find it anymore.
i had read about this a little during germany's hyperinflation in the early 20's.. which was on the 10's of thousand % so not a great example ( hopefully) but people did buy gold and did come out much better.. google gold weimar republic
Be responsible, ease suffering; spay or neuter your pets.
We must get them to understand that government solutions are the problem!
In this remarkable video of Zimbabwe during their hyper-inflation, gold was the only thing that was useful. It shows everyone digging for gold to get a loaf of bread for 0.1 grams.
http://www.youtube.com/watch?v=7ubJp6rmUYM
"If you need (cooking oil, soap, etc.) you have to exchange with gold. Everything is gold, gold; no Zimbabwean dollars."
Good find. Thanks for sharing.