Stock up on Jewelry: Hyperinflation on the Way

by Tom Johansmeyer (RSS feed)
Nov 13th 2009 at 7:00PM

If the fears of hyperinflation are realized, you'll look back with pride on your luxury purchases. All that money you've sunk into custom jewelry and top-of-the-line stones will make you look like an absolute genius. Well, that's the position of South African billionaire Johann Rupert, and I'd take the advice of a guy who can be described that way.

According to Bloomberg News, the told investors, "If we enter hyperinflation, you're going to be so glad that you bought that stuff two months or six months ago." He added, "If inflation picks up, you're going to see people running into your stores, buying high jewelry."

Will inflation cause a mob to form outside the Cartier store on Fifth Avenue? Well, I don't think I'd worry too much about the pushing and shoving, but being ready to throw an elbow probably isn't a bad idea.

Of course, Rupert has something to gain – his company, Richemont, is the world's second largest luxury goods maker (behind LVMH). In his talk with investors in the company controlled by his family, he forecasted "normal growth" with luxury sales showing signs of recovery this month and next.

What Rupert is worried about is quantitative easing ("queasing," if you will), which involves governments' pumping money into their economies to attain some short-term stability. But, this could lead to a nasty hangover in the form of significant inflation rates in a few years.

To beat these problems, sink your cash into the playthings of the rich (though not cars, since they don't hold their value all that well). Gems, in particular, will be more than shiny in a few years.

Tags: billionaire, billionaires, cartier, Fifth Avenue, FifthAvenue, hyperinflation, inflation, luxury goods, LuxuryGoods, lvmh, LvmhMoetHennessyLouisVuitton, Richemont, wealthy