The monetary reform in Germany of 1948 & How owning gold made you a 1,438% profit
This refers mostly to the implementation of the Deutschmark (DM) in „Western Germany“ (the English , American and French occupation zone) associated, on 21st of June in 1948. Here, each person was immediately paid, in two steps – normally on June 20th – a “bounty“ of DM 40 and a month later again DM 20 in cash.
- Bonds were converted at the price of 10 Reichmark (RM) to 1 DM (10:1);
- Wages, annuities, pensions, shares and rental at a rate of 1:1;
- Cash and savings were converted at a price of 10.00 RM to 1.00 DM. But they remained locked until 4/10/1948. Then when opening the accounts savings have been devalued again at a rate of 10 RM to 0.55 DM.
The winners and losers of the reform:
Assets: 1,000 RM --> 55 DM
Debts: 1,000 RM --> 100 DM
Wages, annuities, pensions, shares and rental:
1,000 RM --> 1,000 DM
Price of 1 Ounce of Gold in the different currencies before and after the monetary reform:
1 Ounce of Gold = 34.71 USD = 145.84 RM = 115.58 DM
1 Gram of gold = 1.116 USD = 4.68 RM = 3.71DM
100.00 Reichmark would have bought = 21.367 grams of gold.
These 21.367 grams of gold have been traded at 3,71 DM per gram = 79.12 DM
1 RM = 0.238 USD (1940), 1 DM = 0.30 USD, 1 USD = 3.33 DM
Summary on the monetary reform:
10,000.00 Reichmark in savings was ‘exchanged’ into 550 Deutschmark. The loss in savings was: 94.5%. 10,000.00 Reichmark in gold was ‘exchanged’ into 7,912.00 Deutschmark.
The loss in gold was: 20.88%. The gain compared to savings was: 1,438%
The average price of a 3-Bedroom house with garden cost 8,000 Deutschmarks in 1950. So the move into gold before it all happened made a substantial difference to your daily life experience. By keeping your money into gold you would have preserved almost 80% of your purchasing power. This has made and will make a huge difference.
Remember: History repeats itself and teaches the same lesson.
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