While many Americans can spend their whole life building up their nest egg, unfortunately, many can lose half of their savings over a few bad months. We live in a time of uncertainty and volatility. While some have made their fortunes by jumping onto the Crypto bandwagon early, some have lost significant amounts of money when the bubble burst. While volatility can yield returns, We will be discussing how and why to use precious metals to hedge against inflation.
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History Has Shown Us Precious Metals Hedge Against Inflation
Time and time again, people turn to precious metal investments when nations face financial crises. Gold and silver have become the tried and true ways of protecting your money because of their consistency over centuries. It’s certain that even in the age of stocks and cryptocurrency, precious metals aren’t going anywhere.
For that reason, gold and silver have often been referred to as the best hedges against inflation. When you hear inflation hedges and safe havens, it’s easy to feel overwhelmed and confused. To understand, you first need to understand what inflation is.
Throughout history and the world, economies face challenges and their currency loses power, this is inflation. Some currencies lose value altogether. Imagine stockpiling the German Reichsmark in 1943 and what the value would be today or even 10 years later. While once having great value, today, only a collector’s item.
Precious Metals Hedge Against Inflation Through Allocation
While many have considered making the step towards purchasing precious metals for the first time, they often watch trends and price fluctuations. Watching precious metal prices as if you were watching the stock market may leave you vulnerable. While the price may vary from month to month and day to day; many people hold out waiting for the perfect opportunity to buy.
Precious Metals are a long-term way to protect your wealth and the amount is dependent on the stability of the economy. Holding off waiting for the perfect opportunity to buy is like watching pennies while losing dollars.
Fiat Currency Vs. Precious Metals in Hedging Against Inflation
You will hear me refer to fiat currency many times. Fiat Money is a currency not backed by a commodity such as precious metals. Since 1971, the American Dollar has not been backed by Precious Metals.
With a fiat currency, governments can print money without having to back it which causes hyperinflation. Fiat currency doesn’t hedge against inflation, it causes inflation. As of December 13th, 2022, the Federal Reserve printed 8.58 trillion dollars to increase the money supply and stimulate economic growth in the wake of the damage caused by the COVID-19 pandemic.
Precious Metals Hedge Against Inflation Conclusion
Nesteggers, retirees, and anyone living on a budget, or relying on their retirement accounts are being affected by inflation. If you feel you may need help making the right decisions, you can contact the founder, Luke Ferber, directly at 631-838-8908
