Iran’s currency the rial  lost over 40% of it value against the dollar last week. There are already stores of hyperinflation emerging from the country that has been majorly hit by sanctions.

“Better buy now,” advised the rice merchant in Tehran. The retired factory guard took him up on the advice, buying 900 pounds of the stuff to feed his extended family for the next 12 months.

“As I was gathering my money,” the retiree told The New York Times, he got a phone call. “When he hung up, he told me prices had just gone up by 10%. Of course, I paid. God knows how much it will cost tomorrow.”

The 3 stages of inflation as described by Austrian economists are:

In the first stage, people still hang onto their money, expecting prices to come down. In the second stage, people part with their money to stock up on goods before prices rise again. In the final hyperinflationary stage, people buy anything they can get their hands on — even if they don’t need it — because the goods are more valuable than the currency.

But as the currency continued to collapse despite the best efforts of the Iranian Central Bank, the people are turning to gold.

Just over a week ago were the first to shed light on the reality of hyperinflation on the ground in Iran – and subtley suggested the whole thing could be watched in real-time. Soon after, a mysterious cabal of 16 currency manipulators was arrested and the Rial jumped dramatically higher (according to official sources) – as if by magic there was no problem at all. This all sounded a little too good to be true (just like unemployment rates in slightly more controlled economies). Sure enough, by the power of social media, we now know it was too good to be true.

As open-market foreign exchange rates – not just Rial-to-Dollar – have disappeared from the major currency exchange sites, as trade has reportedly slowed to near suspension after the Central Bank ‘imposed’ a rate of 28,500 Rials to the USD this weekend.

Critically, though, via EAWorldView, while the ‘real’ rate for the Iranian Real is effectively blacked out, gold prices continue to soar. ‘Old gold coin’ is now selling for 16 million Rials, up 23% from the pre-suspension 13 million Rial levels – even as the

Central Bank tries to suppress reality (especially to the rest of the world’s gaze) as hyperinflation continues – though less transparently.

Source: Forbes, ZeroHedge

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