In an era of inflation, gold still reigns supreme. The current inflation rate is the highest it’s been in over 40 years; in 2022, inflation rose to over 9%, which is the fastest pace since 1981. Consumer prices are on the rise, and inflation isn’t expected to slow down. Runaway inflation rates suggest that $1 in 2020 will equal just 65 cents in 2030. For the 12 months ending in July 2022, the food index faced almost an 11% increase, and the energy index skyrocketed, experiencing a 32.9% increase. This high rate of inflation is taking a massive toll on the dollar. Just 6 cents in 1922 has the same buying power of $1 currently. Let’s see why investing in gold is so valuable.
The Stability of Gold
Over the past 100 years, unlike gold, the dollar has depreciated rapidly. A brief history of spending over the past 100 years clearly shows how the dollar has changed. After the Great Depression, following the end of WWII, the economy began to stabilize, but the cost of everything nearly doubled. In the 1970s, the economy attempted to level out but following in the 80s, inflation hit an all-time high of 14.5% and average consumer prices began to soar. In the 2000s the value of the dollar continued to diminish, leading to our current economic state. COVID-19 had massive impacts on supply and demand, shutting down the economy and causing an unconventional recession.
Through all of this, since 1933, the dollar has lost 99% of its value against gold. Unlike other consumer goods, gold has remained stable. For example, yearly college tuition has seen massive increases in prices over the past 100 years; since the 1920s, the price of schooling has seen almost a 26,000% increase in price. In comparison, gold has faced massive value increases. Since 1920, gold has almost seen a 43,000% increase in price by the ounce. History doesn’t repeat, but it often rhymes. As we are faced with a recession, investing in gold could help protect your bottom line and help stabilize your business.
Gold is a valuable investment for many reasons. It is low risk, has tangible ownership, its value steadily increases, gold has a higher yield than a traditional savings account, and there is stronger demand during economic strife. Gold is one of the few investments with a 0% counterparty risk; this means the probability that the other party will default on their obligations is null. Additionally, precious metals cannot be reduced in value by mass printing because there is a set amount that exists on Earth, which is around 244,000 metric tons.
Historically, even during recessions, gold has increased in value. During the 2008-2012 recession, gold saw a 101.1% surge in interest, meaning more investors turned their money into gold, increasing its value. Gold also has a higher yield; in 2020, the stock market investment return rate averaged just 18.4%, but gold had a 24.6% return on investment. Finally, during economic strife gold is often in high demand. During the height of the pandemic, worldwide gold investment demand jumped to 80%. When it comes to protecting your business and wealth against economic instability, gold is a great option for a secure investment.
Brought to you by: usgoldbureau.com
Brian Wallace is a Columnist at Grit Daily. He is an entrepreneur, writer, and podcast host. He is the Founder and President of NowSourcing and has been featured in Forbes, TIME, and The New York Times. Brian previously wrote for Mashable and currently writes for Hacker Noon, CMSWire, Business 2 Community, and more. His Next Action podcast features entrepreneurs trying to get to the next level. Brian also hosts #LinkedInLocal events all over the country, promoting the use of LinkedIn among professionals wanting to grow their careers.