Government Lies Part II
Inflation is a sustained increase in the price of goods and services in a county over time. When inflation rises, every dollar buys a smaller percentage of a good or service, decreasing the value of money. While inflation may typically be limited to small increases that seemingly go unnoticed, such as how gas is currently rising about a penny every other day, however its impact can be significant in the long run.
Inflation is measured as an annual percentage change, a rate which is currently declared by the government to be 2.2%, in reality, inflation is between 7% and 9%. This discrepancy can result in what seems like a sudden appearance of hyperinflation, commonly associated with depressions.
An Example of Inflation
To illustrate inflation, imagine if you bought a loaf of bread in 1900 costing 10 cents, that same loaf today would cost around $2.70. Gold was worth $20.67 an ounce in 1900, meaning the bread cost .004837th of an ounce of gold in 1900. Today, gold’s price per ounce is around $1,300, so .004837th of an ounce is worth $6.30. Buying that same loaf of bread today with the same amount of gold as in 1900 would result in a refund of $3.60 worth of gold ($2.70-$6.30), compared to an increased cost of $2.60 using cash ($6.30-$2.70).
Over time, currency becomes less valuable due to inflation, as proven above. Imagine how this affects long-term savings such as retirement accounts. What if in 30 years the money you’ve saved for retirement isn’t worth the amount you need to get by? What would you do?
Precious metals protect an investor’s wealth when fiat currencies cannot. As the value of money decreases over time as a result of inflation, the values of gold and silver traditionally increase. The strengthening value of precious metals can help hedge against the weakening value of paper money, in addition to stock market volatility. Thinking about inflation as a decrease in the value of currency, as opposed to an increase in prices, can be helpful when comparing cash with other assets. Gold has historically outperformed all of the world’s currency in the long-term, making it a much safer bet over time compared to cash.
How can you easily incorporate precious metals into your retirement plan?
A gold IRA (Individual Retirement Account) is a great place to start. A gold IRA is a retirement account in which physical gold, or other precious metals, is held in custody for the benefit of the IRA account owner. It functions the same as a regular IRA, only instead of holding paper assets, the IRA holds physical bullion coins or bars.
Using gold and silver as a hedge in your retirement plan, such as in a gold IRA, safeguards your future against the problems of inflation and preserves the purchasing power of your wealth. To learn more about inflation-proofing your retirement savings with a gold IRA, call Noble Gold Investments today and we’d be more than happy to answer your questions.