Money, some people say that it’s the root of all evil but it’s quite obvious that life can be very, very difficult without it. As you probably know, while money is essential for daily living, it’s not a solid thing and it changes constantly according to the economy’s status. A good example of this would be the different exchange rates for the American dollar such as the dollar being equal to a hundred Japanese yen while the British pound is worth at least two dollars. Then there’s also how the economy changes on a semi-regular basis, requiring money to change with it, including how much it’s worth and what you can buy with it. Buying gold to protect against inflation is a great idea to preserve your wealth.
Inflation is that little detail when there’s so much money in a given place that establishments have to raise their prices to make ends meet. That’s right, having too much money in one place such as a city can have some serious effects on the local economy. So for instance, if a lot of people in New York or London have won the lottery and gained a considerable fortune in the process, any establishments in the area will have to raise their prices in response. This goes to show that having too much of anything is never a good thing, and money is no exception to this rule. However, there are ways that people can still protect against the effects of inflation and the most popular method would be buying gold.
Yes, that gold. That shiny yellow metal that everyone’s going crazy about. That same shiny yellow metal that hundreds, if not thousands, of people have rushed on over from different parts of a country or a different country altogether just to get to. The same shiny yellow metal that ancient kings of the Egyptians, Chinese and many Mesoamerican civilizations decorated their tombs with. Gold can safeguard your money, protecting it from the always increasing inflation.
So how can gold help with the situation regarding inflation? Well, to answer that question, you first have to note that while money and its value is in constant flux, gold doesn’t change much in terms of value. Gold will almost always be valuable no matter where you are in the world. Note how early civilizations (and many modern ones as well) openly compete for gold and there are those willing to stoop to less ethical means just to get their hands on it. The bottom line is that gold, unlike money, holds its value, and may even increase in value when the value of currency goes down. It will always be very valuable and, if history proves accurate, will continue to be valuable for times to come. Therefore, with gold, you probably have less to worry about when it comes to the changing of prices and values of various commodities.
Here’s a better rundown of why buying gold is considered effective when it comes to dealing with inflation issues:
The Value of Gold is Constant
- The ancient kingdoms of the Middle East and North Africa, namely Babylonia, Persia, Egypt and India placed a very high regard for the metal even more than say iron despite the fact that the latter is actually more useful and is much more practical in everyday use. Gold was mainly used as a decorative material but it was still apparent that even though it didn’t have many practical uses people still valued it to the point that they were willing to use up their fortune just to keep them safe. Just think of all the golden junk the pharaohs of Egypt stocked in their pyramids in the hopes that they could take with them into the afterlife.
- During the age when European settlers had begun to make themselves at home in places like Australia, Canada and the United States, the simple rumor of gold being in the area would send them all packing and heading towards wherever the gold was thought to be found.
Gold Doesn’t Degrade
Unlike most other metals like iron, copper or the metals used to make actual money like nickel, gold doesn’t degrade, which is another reason why buying gold to protect against inflation is a good idea. Like it’s value, the quality of gold is almost constant and is why they have acquired even greater value in the modern age. For instance, due to both the conductive properties and resilience of gold, it is now being used as materials for wiring as copper tends to degrade over time unlike gold.
Gold and Hyperinflation
It should be noted that unlike iron or copper, gold is extremely rare. It’s actually rarer than the media would have us think and it’s estimated that only 160,000 metric tons of gold have been mined so far. So unlike most commodities, gold will almost always be in demand. Buying gold now will not only protect you from inflation, but could also serve as an investment that increases in value in a short period of time.
In the event of a hyperinflation, that’s when money loses its value quickly because of rising prices, gold can retain much of its value due to its scarcity. That means that while twenty bucks might not be enough to purchase a single cone of ice cream someday, a bar of gold will always be worth the same as it did with little regard on how the economy has changed since then. One can note how the gold in fort knox remains very valuable despite having been there for centuries now. Buy gold now to protect yourself from inflation, and you will reap the benefits later!
This knowledge comes in handy once you realize that hyperinflation is likely to happen in the United States. Of course, this is mostly conjecture but the recent economic recession surely has some effect on the way the economy is today. There’s really no telling how the economic situation might change in the next few years and how much value one can place on the American dollar. Which is another great reason why you should buy gold now, before it becomes too expensive to buy.
Inflation and Gold today
One should note that with the way things are going, a lot of European countries and individuals have opted to place their assets into bars of gold instead of putting them in the bank as cash. This goes to show how gold remains to be so valuable for a lot of people. This also shows that these wise investors know that their money will be safe from inflation, since they have bought gold.