Inflation vs. Gold and Silver: Why You Should Invest In Precious Metals

Have you gone into the store lately, and noticed as you’re swiping your card that the same $100 bill you used to fill up your grocery bag with, no longer fills it up anymore?

Sigh… inflation. 

The price of things has indeed gone up, but it hasn’t fully registered for most, because the media, powered by the government, keeps feeding us lies to pacify us.

Well, we’re here to give you the cold, hard truth in an effort to help you better prepare for where the U.S. economy is heading.

There’s no sense in burying our heads in the sand when everything we’ve worked hard for as a country could possibly be at stake. In this article, we’ll talk about this concept and discuss inflation vs. gold and silver.

Understanding Inflation in the USA

We already discussed inflation in a previous article, but we’ll give you a brief refresher.

Inflation is the rate at which prices for goods and services rise. It’s important to note that inflation doesn’t just refer to the price of consumer items that we purchase on a daily basis.

The inflation rate includes all prices in the economy, such as the prices of houses, healthcare, and even stocks and bonds. The inflation rate is calculated by the Bureau of Labor Statistics (BLS), which is a part of the United States Department of Labor.

They measure inflation by using what’s called the Consumer Price Index for Urban Consumers (CPI-U). The CPI-U includes 87 different items that are weighted based on how many urban consumers spend on them. Some of these items include food, clothing, housing, transportation, and medical care.

The BLS releases an inflation report every month, which details the inflation rate for the previous month.

It’s important to note that inflation can be a good thing or a bad thing, depending on how you look at it. For example, if inflation is caused by an increase in productivity, then it’s considered to be good. However, if inflation is caused by an increase in the money supply, then it’s bad.

Now that we’ve got a firm understanding of inflation, let’s take a look at how it’s been affecting the United States in recent years.

Inflation in the USA Today

brown and gray high-rise building

The inflation rate in the USA has been on a general upward trend since the early 2000s.

However, there have been some fluctuations during that time. For example, inflation spiked in 2008 due to high oil prices and increased food costs. Inflation then decreased during the Great Recession as demand for goods and services fell.

Since then, inflation has been slowly rising and is currently sitting at around 2%. While this may not seem like much, it can have a big impact on your purchasing power over time.

For example, if inflation is at 2% and you have a $100 bill, that $100 bill will only be worth $98 in a year. In 10 years, that $100 bill will only be worth $89. And in 20 years, it will only be worth $80.

Inflation also affects other expenses. You can see this in rising gas prices, groceries, bills, and more. As money becomes less valuable, other products start to rise in price, as well.

This is why it’s important to invest your money in inflation-resistant assets, such as real estate or gold.

Does Inflation Affect Gold and Silver?

Precious metals, such as gold and silver, have long been considered inflation-resistant assets. This is because their prices tend to increase when inflation is high and decrease when inflation is low.

The reason gold and silver prices increase during periods of high inflation is because they are seen as a store of value. This makes them a good hedging tool for investors who are looking to protect their portfolios from inflation. When the prices of goods and services are increasing, people want to hold on to assets that will retain their value.

It’s time to rise up and start taking action to protect ourselves, and that’s by investing in precious metals such as silver and gold.

If you want to start, consider calling us at (800) 867-6768 here at West Hills Capital. We’ll help you transfer your stock and bond IRAs to gold and silver IRAs for your retirement savings, all for free. Reach out today for more details!