Gas, Clothes, Food, Tires, Lumber, Etc. -Ever wonder why these prices get more & more expensive? The reason is inflation. We all know what the definition of inflation is, but what really causes this?
Before the Federal Reserve was created… every dollar the United States printed, and in circulation, was backed with ‘Real’ money, or Gold. –Gold, the US had in reserves. This all changed in 1971 when we were taken off the Gold Standard and the US Dollar was labeled as a currency and not money. Gold and Silver is used and recognize as real money for over 5000 years.
To make things simple, here is a comparison in 2001 vs. now in 2012:
Oil in 2001 average: $22.81 – now $118.00 = 417% increase
Gas in 2001 average: $1.70 – now $3.42 = 101% increase
Gold in 2001 average: $271.07 – now $1728.80 = 537% increase
Silver in 2001 average: $4.59 – now $33.84 = 637% increase
You should not save, because “saving” was a smart thing to do back when our money was backed with gold and silver. It’s 2012, and the correct term would be “Hedging” - Hedge against inflation. Our dollars are dropping an average of almost 10% a year. It has lost 98% of its purchasing power! So next time you’re at the grocery store, the bag of chips you bought last year for .99 cents… is now $1.09 or higher, that’s inflation!
The US is $15 trillion dollars in debt and the more money it prints and spends, the faster your purchasing power or value in dollars will drop. Think your savings account, CD, Stocks, Bonds’ 2 to 4% returns or annual profits sound good? Not so much when the inflation rate and cost of virtually everything is increasing 8-10% every year right?
So, remember to HEDGE yourself and save in something that will not decrease in value.
Gold and Silver seems to make the most sense. They are small, easy to store, tangible assets that hold real money value and used all over the world. They won’t rot, spoil, or go bad. You won’t need any storages or warehouses. Hence, all these “We Buy Gold” commercials!
Most importantly, they hold their value. When the prices of precious metals go up, it’s because the dollar value is dropping. In other words, it’s taking more dollars now-a-days to buy the same exact product that took less dollars years ago!
Until next time, protect yourself and your family! – Los Saigon!!
(PS) Special of the week: Vietnamese BBQ Pork Rolls with side salad and ponzu sauce!