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Gold and Inflation

gold and inflation

Gold has been something people have invested in since it was first discovered. It’s historically been used in glamorous furniture, jewelry, and various other expressions of wealth. Looking at today’s world, gold, although still used for those other purposes, is now an investment.


Just in the same way that one opens a savings account, puts money into the stock market, or saves novelty items, gold is an investment. What makes gold different is the consistency and safety of return it has. 


While the stock market can yield high returns but is inconsistent, a savings account yields low returns but is consistent, and novelty items are a mixed bag. Gold manages to do it all. This wasn’t always the case though, gold used to have minuscule returns, barely changing in value over time.


The Rise of Inflation


What changed this, primarily, is the rise of inflation. Inflation has always been around but never to the extent that it exists today. In 2022 inflation rose at a rate of 9.1%, the biggest increase in decades. This isn’t a single year exception either, by 2030 the dollar of today is projected to be worth $0.65.


Gold ultimately performs against inflation. Looking back at the 2008-2012 recession, gold rose by over 100%, fueled by the economic strife the world was facing. It’s no surprise that this trend has started to repeat following the global COVID pandemic. 


During the pandemic in 2020 gold even managed to surpass the stock market in investment returns. Holding a return rate of 24.6% in comparison to the stock markets 18.4% made it so that gold was simultaneously more economically beneficial and safe than the stock market. And with a projected increase of over $6,000 per ounce before 2030, it doesn’t seem that gold’s returns are going to be returning to low rates either.


This all isn’t to say that gold is a perfect investment that’s available to all. It’s much harder to obtain than nonphysical stocks, it can be a bit harder to trade, and it promotes less market growth and spending, something that kills economies. Although the reality of the world today is that Americans are scared. 


In Conclusion

Inflation is at a high, investments are starting to drop, the appeal of something as material and safe as gold cannot be understated at times like these. Gold is the investment of the American who wants to be safe while also taking a look at the future. It’s not perfectly reliable, and it’s not always beneficial, but it’s more than understandable why Americans may choose it over the alternatives.

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