Gold’s Relationship with Modern Inflation
When it comes to investments in the United States, a plethora of options open up to any willing consumer. From the safest savings account to the most risky stock option, there’s no shortage of options for those trying to make money using money. Although in recent years few have managed to stay as consistently safe and to rise in value as well as gold has.
The main appeal of gold has always been its physical nature. Unlike the U.S dollar, gold simply cannot be printed, there’s a finite amount, and no meaningful amount can ever be mass produced. This ties directly into the safe nature of gold. When there’s no bank to default, no one else to rely on, gold has no counterparty risk.
This means that once a consumer owns gold that gold will retain value as long as the market at large continues to value it. In recent times the market has not only continued to but increasingly has started to value gold more and more year after year. This comes as a direct consequence of when gold increases in value, times of struggle.
Between the period of 2008-2012 as the recession took hold of the world, gold saw an over 100% increase. Globally gold has increased in value during any sort of economic strife. In recent years, during and following the pandemic, gold has seen its value grow at increasing rates year after year.
In 2020, gold had a 24.6% investment return rate, in that same year the stock market had a rate of only 18.4%. This meant that gold was not only safer but returning bigger investments than the stock market. Looking a little bit more closely at the modern American economy the reason behind this becomes obvious.
Inflation is reaching rates never before seen in America. In 2022, inflation rose 9.1%, the biggest increase in over two decades. Prices of food, gas, tissues, and any basic product are all increasing. This spells a scary fate for the average American consumer. The dollar is losing more value year over year, but gold is only thriving.
In this decade, from 2020 to 2030, the dollar is projected to lose $0.35 of value. Keeping this assumption in mind, gold is projected to go from a price of roughly $1,700 per ounce to $8,900 per ounce. This is a truly unprecedented increase in value. And while there’s no guarantee that things will turn out that way, the connection between inflation and gold is simply undeniable.
Brought to you by: usgoldbureau.com
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