Owning 100 trillion-dollars
We often get asked the question what is a good alternative investment to property? Tesla, oil or maybe Gold may spring to mind. Well believe it or not one of the strongest opportunities emerged off the back of the crumbling Zimbabwean economy, the 100 trillion-dollar bill.
The Zimbabwean 100 trillion-dollar bill (14 digits) was introduced during one of the most terrible instances of hyperinflation ever recorded. As Zimbabwe’s economy imploded, its currency dived and dived becoming so valueless a hundred trillion-dollar note wouldn’t even cover the cost of a single bus fare. At its worst point the country’s central bank could not even afford the paper to print new currency with its value sitting so low. President Mugabe attempted to stem the decline by issuing edicts to ban price rises, but the financial attrition proved too out of control effectively wiping out the populations incomes and savings. With daily price rises occurring across the country, workers’ pay would often become valueless by the end of the day.
With people needing bails of money just to buy a loaf of bread the decision was made to produce bank notes intended to help everyday life continue. The 100 trillion-dollar bill was introduced for just a few months in 2009 before the decision to drop the currency completely, with the introducing of the South African Rand among other more valuable currency’s.
Just a few million of these notes were printed, and with the currency discontinued were now deemed useless. However, there were a few speculators who realised that such a unique note would one day become a collector’s item. In 2011, The Wall Street Journal wrote an article about David Laties, owner of the Educational Coin Company in New York, who had speculated about $150,000 (£104,000) importing the notes from Zimbabwe, sensing they would become “the best notes ever”. There were others who followed suit, buying notes for around £1.50 each. Today they trade at around UK £20-25 a note, which in financial terms represents close to 1,500% return. This is a striking return when you’d expect to make no more than a few percent on savings and stocks over a similar period (2009 – present).
Today Zimbabwe continues to suffer some of the world’s worst deflation, currently at -2.3%, yet ironically created one of the best-performing asset classes in recent memory.