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Inflation vs. Gold

Investment tips

Published: February 22, 2022

what is a better inflation hedge gold vs treasuries best asset to invest in

Inflation is attacking your retirement! Your dreams of sitting on a beach with gray hair, a good book, and a cold beer are under siege. It may be time to strategize to protect your older years and conquer inflation once and for all.

By the time you are planning for retirement, you are in a battle against inflation. You must understand your enemy before you can defeat your enemy. 

Understanding how inflation works, who is behind it, and what to do to protect yourself from it will give you the upper hand in ensuring it does not affect you and your investments

Inflation could get better, or it could get worse. We are not here to scare anyone, but things are not looking that well at the rate our economy is heading right now. Investing in an asset like Gold is the only insurance during the recent uncertainty. 

Key Takeaways 

  1. Inflation is devaluing the value of your investments. The Fed is behind the move. 
  2. Inflation is not going anywhere. Inflation is not temporary 
  3. Gold is the only asset that thrives during inflation. It is the best store of value.

What Inflation Means For Your Investments

Inflation devalues your money. In other words, if you are buying a pound of beef for $5 now, it will most likely cost you $10 in the future. 

The key is to make sure the capital gain of your investment is more than inflation. As of May 2022, inflation is at 8.2%, according to computation from our government. 

The Consumer Price Index (CPI) is the primary factor determining inflation. The CPI determines inflation by comparing the price of a fixed basket of goods and services spanning two different periods.

For example, 1 pound of potato plus 1 gallon of milk plus 1 pound of lean meat plus 12 eggs cost $20 in October of 2021. By October of 2022, the same goods would cost $25. The CPI would have been 25%. 

However, Congress determined the CPI is not accurate over time because it does not consider “new products.” Congress believes the CPI ignores product quality improvement, which attributed price increases to inflation instead of quality improvements.

Nor how consumers substitute one item or outlet for another, that is, respond to price increases and opportunities to pay less for goods and services by changing what they purchase and where they shop.

But there are more important factors to think about here. Who is causing inflation? And are these numbers accurate? 

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The Fed Likes Inflation

There is more than one theory about what causes inflation. One is the demand-pull theory. Increasing demand for goods and services drives prices up to prevent inventories from being depleted.

Another theory is cost-push. If production costs increase, companies have to push up prices to keep making a profit.

But the biggest villain of them all is Monetary inflation. If there is an oversupply of money, the value of that money goes down, and prices go up. The U.S. was in the middle of a money-printing party the last couple of years. 

The Fed was printing money to their heart’s content. From the start of the pandemic to just last year, the federal government printed millions of dollars for our nation in the assistance of urgent aid.

Noble Gold supports the movement to protect and help our country when in need of urgency. But there were consequences for these actions. Inflation spiked to all-time highs of 8.5%.

And listen, we’re not saying the pandemic caused our government to create inflation. Inflation has lived with us for years. But throughout these years, there has never really been an assurance of how bad inflation is. 

The Fed may not be telling us the entire truth behind the real inflation in the U.S.

Our Government Is Lying To Us

Our government has done an excellent job creating inflation and hiding the real U.S. inflation rate. 

The Fed insists that the March 2022 inflation rate of 8.5% was the highest the U.S. has ever had since 1981. One gal of fuel won’t cost us our arm and leg if that is true. 

Using the original inflation methodology, inflation should be at 15%.

It is the highest rate in four decades, wiping out pay raises and reinforcing the Federal Reserve’s decision to begin raising borrowing rates.

This is the sharpest year-over-year increase since 1981. The acceleration of prices ranged across the economy, from food and furniture to apartment rents, airline fares, and electricity.

Self-help guru Jordan Peterson tweeted a chart that shows the year-over-year inflation rate is almost 15 percent, not 8.2 percent.

The chart comes from a website called Shadow Government Statistics. Its premise is that the Bureau of Labor Statistics made a series of methodological changes in the 1980s and 1990s that systematically understated the actual inflation rate. 

According to Shadowstats, if you calculate the inflation rate using the old methodology from the 1980s, the true inflation rate is 6 to 8 percentage points higher than the official statistics indicate—and has been for decades.

Even Twitter’s founder and former CEO, Jack Dorsey, subscribes to the ideal. 

Note that the chart has no possible flaw. Statisticians could probably have a party on the accuracy of an estimate based on either common sense or mathematical formula. 

But one thing that everyone agrees on is that the Fed manipulates the inflation figure to appear lower. Whatever inflation rate we see now is not accurate. It is higher. 

This is not to make it all grim. Believe it or not, we don’t like making people feel bad. Noble Gold tells you the facts because we want you to prepare yourself and your investments.

The 8.2% is a manipulated figure. At the minimum, your money is getting devalued by 8.2%. That means you need to gain more than 8.2% to maintain and survive when you retire. And nowadays, some people can’t even retire comfortably because their savings are losing value. 

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Road To Retirement 

Some people cannot retire comfortably nowadays because they cannot save enough. Their salary cannot keep up with inflation. 

Instead of retiring, people are resigning because their salary isn’t enough to afford an average lifestyle. According to Fortune Magazine, over 4 million Americans have quit their jobs for 6 months in a row. This is also known as the “Great Resignation”. 

Many job positions are available as people are shifting careers and exploring different job ventures to make a better living. 

Even if you find a different career or start your own business, you need more than $1 million to retire comfortably today. 

At age 65, Americans have 19.4 more years to live. The average American retiree spends $50,220 a year. That means you need $1,120,408 to retire comfortably.

With social security benefits at risk of being cut, you will most likely run out of money sooner than planned. 

Some people choose to live a simple life on the grid, in affordable cities or countries, to retire early. But even with a simple lifestyle, inflation makes their money lose value. 

So it’s crucial to think about investing in assets that will store the value of your wealth. It’s vital to do so fast because inflation is not going anywhere. 

Inflation Is Not Temporary

Several people think inflation is transitory and will be gone soon. Others believe that inflation is secular and has a long-term persistence.  

The matter of the truth is that inflation is here, and it’s here to stay until our government starts behaving differently. 

The Federal Reserve open market committee has voted unanimously to continue the central bank’s easy-money policies, again dismissing soaring inflation as ‘transitory’ and saying COVID-19 still poses risks to the economy.

Fed Chair Jerome Powell recently openly admitted that “inflation could be higher and more persistent than we expected”. If the Fed didn’t stop before, the Fed would not stop now. So it’s important to look into something that will protect your money from any uncertainty. Gold is the only asset that thrives during inflation.

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Gold Survives Inflation 

In 1990, L.A. Times said $400 could afford you a month’s rent for a studio apartment. It could also buy you an ounce of Gold. 

Fast forward to 2022, one ounce of Gold is worth \$1900. Nineteen hundred could pay your rent for a 1 to a 2-bedroom apartment in one of the most expensive cities in the US, Los Angeles.

And if you had kept 1 million dollars in cash 20 years ago, it would only be half as powerful now. A little over $570,000 is what it would be worth now. 

But if you invested 1 million dollars in Gold 20 years ago, you would be sitting on \$6.6 million today. 

That is the concept of a hedge. A hedge stores the value of your money. It protects you from inflation.

A share in a company may be a good investment, but if the economy crashes and that company goes bankrupt, your money will crash too. 

There is no other asset that could store the value of your wealth as Gold does. Noble Gold always advocated diversification, but Gold is the only defense that will stay up when everything falls. 

So it’s crucial to get into Gold now, whether it is in a Gold IRA or owning the physical metal. Gold will help you fight inflation, especially during our recent uncertainty. 

We don’t know how our government will continue behaving. No one does. We cannot rely on the people creating the problem we are in. If they’re lying to us about things like the current U.S. inflation rate, can we believe when they say inflation is only temporary?

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