Gold is your protection from inflation, hyperinflation

by IRA Rollover in Gold, Gold IRA with Comments Off on Gold is your protection from inflation, hyperinflation

What is inflation, hyperinflation?

Gold may be your best best against inflation. But first, we need to see why. The easiest definition for inflation is that given by Ron Paul: More money means less value. By the same token, hyperinflation means, according to Investopedia: rapid or out of control inflation. Hyperinflation often occurs when a nation increases its money supply but without having a similar increase in its gross domestic product (GDP). The GDP measures the value of a country’s goods and services in a specific period of time.

hyperinflation - buy gold

GDP means nothing

However, at least one financial expert feels that the GDP is not a good economic indicator. Alasdair Macleod, former Guernsey bank director as well as a mutual fund manager and a stockbroker on the London exchange, said the GDP is impossible to measure because of the complexity of measuring an entire country’s production of goods and services. Instead, MacLeod says, economists measure a country’s total money supply.

But the economy is sound, so how can prices change?

Macleod says that if the GDP had been measured in the early days of Germany’s Weimar Republic (after World War I), that country would have been seen as having an economic boom. That’s because prices fall over time when the money supply is stable, thanks to greater production efficiency and new technology. Macleod also says notes that the US GDP has remained the same for 50 years, if one adjusts for government spending, flat currency and prices that rise because of money and credit expansion. If Macleod is wrong, he asks, how can the total value of goods and services vary if the money supply is stable?

The US dollar has fallen and will keep on falling

The Federal Reserve’s Open Market Committee announced in 2012 it would devalue the dollar by 33% by printing more money and using it to buy $85 billion in bonds every month. This could bring about more inflation and economic problems.

Since 1971, Gold Prices Have Risen X 44!

Or, put another away, the dollar’s purchasing power has fallen by 44 since the Bretton Woods system ended during the Nixon Administration. Although the dollar is a “reserve currency”, it decreases in value when more currency is printed. Although this is fine for the U.S. because we can print money whenever we choose, other nations have problems because the value of their currency is related to the value of the dollar. So, emerging countries, including India and China, are snapping up gold: China has doubled its gold reserves just since 2007. Those countries want gold to be part of the IMF (International Monetary Fund’s composite currency, or Special Drawing Right (SDR).

buying gold

Adjust gold pricing = protect the $

Many world markets are moving away from the dollar and the euro as their currency bases, but the Federal Reserve is still printing trillions of dollars. There will soon be more dollars than demand for them. In order to protect the dollar, the Fed is working with the price of gold. For example, clients at Goldman Sachs and other brokerage firms were told that hedge funds and other institutional investors were unloading gold and were advised to do likewise. (This was an effort to keep those clients from investing in gold.) The price of gold thus dropped but immediately recovered. However, the outlook is not good – when gold dropped 21% in July 2008, the stock market collapsed a few months later.

Thievery in Cyprus

The nation of Cyprus recently decided to tax its bank holdings, a move that usually would cause investors to turn to gold rather than currency as safer investments. However, the Fed’s manipulation of gold prices not only boosted the value of the dollar and the euro, it also resulted in a drop in gold prices. These trends are only possible through market manipulation.

The Fed is thus working toward “taxing” American bank deposits because:

  • there is more US currency available than demand for it
  • the Fed wants to finance the US budget deficit, keep interest rates down and support the US bond market by printing trillions of dollars
  • the dollar is depreciating at an astounding pace
  • the dollar has been abandoned by other countries

There are many signs that the dollar is headed for collapse: Germany recently decided to take back its gold from the US. The state of Texas has plans to create a bullion depository. Gold has long been used as a hedge against inflation.

Money in the bank is not YOUR money

You may not know it, but a bank legally owns your funds as soon as you deposit them. Basically, you hold IOUs to the bank and are considered an unsecured creditor.  The Federal Deposit Insurance Corporation (FDIC) announced plans in December 2012 to convert those IOUs into “bank equity” as needed in order to prepare for the next financial disaster. What’s more – there are not exceptions for FDIC insured funds.

Gold IRAs protect your money

These reasons show that now’s the ideal time to invest in gold. You can open and IRA or rollover an existing IRA backed by precious metals like gold. The safest way to do so is by buying gold coins such as American Eagles or Canadian Maple Leafs. An alternative is to consult a reputable fund management firm with an excellent performance record, such as Regal Assets.

Remember, no paper-based investments (i.e., stocks, bonds etc.) can protect you from inflation. (Remember how millions lost their savings in 2008.) Protect your hard earned money with gold. Visit our gold company today and ask how you can open a gold IRA.

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