3 Ways Gold Can Protect You Against Rising Inflation

increasing inflation

Reading the mainstream media over the past few months, you can be forgiven for thinking that inflation isn’t a problem anymore. After all, with a tough election coming up this fall, President Biden needs all the positive press he can get, and so the mainstream narrative has to paint inflation as being under control.

But while inflation is far lower than its peak, it’s rising once again. The latest inflation data show that inflation rose 3.5% year on year, marking an acceleration from earlier in the year.

Far from no longer being problematic, inflation continues to be an insidious threat to American households. And unless those households have a plan to protect themselves against inflation, their purchasing power and standard of living will continue to be eroded by inflation.

Thankfully there are ways to protect yourself against inflation, including by purchasing precious metals like gold. Here are three ways gold can help protect you against rising inflation.

1. Protect Purchasing Power

Gold is famous for its ability to maintain its purchasing power over the long term. While the US dollar has lost over 87% of its purchasing power since 1971, the gold price has gained nearly 7,000%.

It’s that kind of stability in the face of relentless inflation that continues to make gold such a popular safe haven asset. With inflation remaining problematic and the inflation rate rising once again, more people are turning to gold to protect the purchasing power of their savings.

2. Asset Growth

Gold can also produce pretty significant asset growth through the short and medium term. During the 1970s stagflation, for instance, gold’s annualized rate of growth was 30% per year over the course of the decade.

During the 2008 financial crisis gold gained 25% during the same period that markets fell more than 50% (October 2007 to March 2009). And in the aftermath of the 2008 financial crisis, the gold price nearly tripled from its 2008 lows until its 2011 all-time highs.

Gold has once again reached new all-time high prices in recent weeks, continuously gaining value as safe haven buyers push the gold price ever upward. Even with the recent retrenchment, gold is still trading at over $2,350 an ounce, a price that many analysts didn’t think it would reach this year.

Now many of these analysts are rethinking their positions, with the expectation that gold might reach $2,500 by the year’s end. And with rising geopolitical tensions and the continued threat of recession at the back of people’s minds, this could be the beginning of another significant bull run for gold.

3. Peace of Mind

Aside from the tangible benefits of gold, such as its ability to maintain its purchasing power and its ability to gain value, there are certain intangible benefits too, which somewhat ironically derive from gold’s tangibility.

Being a tangible, physical asset can provide people with greater peace of mind during times of financial turmoil. For most of us, our 401(k) and IRA accounts are populated with financial assets that seem to exist in some nebulous digital ether.

We know that we own shares of funds, or stocks, or bonds, but we don’t have anything physical we can place our hands on. Gold is different.

With gold, you have physical gold coins or bars that you can put your hands on. And if you have physical possession of your gold, you know that that gold won’t go bankrupt, won’t go out of business, and won’t default.

How to Benefit From Gold

There are two primary ways that most people buy gold. The first is through direct cash purchases and the second is through a gold IRA.

Direct cash purchases of gold have the advantage that they can be shipped directly to you. Once you have that gold in your hands, you realize that your wealth is really yours.

Of course, the dangers of storing gold at home include theft and fire. You can mitigate some of those risks by storing gold in a safe.

Some people prefer to hold all their gold at home because they don’t trust that gold storage facilities will have their gold ready when they need it. And others may prefer to have their gold delivered to them but then store it in a safe deposit box.

In either of these cases, the ready accessibility to their gold is a benefit they don’t want to give up.

Then you have people who buy gold through a gold IRA, very often to try to protect retirement savings in tax-advantaged accounts.

A gold IRA functions the same way as any other IRA, only that it owns physical gold coins or gold bars rather than financial assets like other IRAs. With a gold IRA you can use your existing pre-tax assets from 401(k), 403(b), TSP, IRA, or similar accounts to buy gold.

Gold IRAs can be funded with tax-free rollovers from your existing retirement accounts, enabling you to protect your existing savings without having to take a tax hit by taking a distribution in order to buy gold.

Regardless of which method you choose to buy gold, whether it be through a direct cash purchase or through a gold IRA, Goldco has options available for you. We work directly with mints throughout the world to source high quality IRA-eligible gold coins, cutting out middlemen to get you your gold as soon as possible.

With over $2 billion in precious metals placements and thousands of satisfied customers, Goldco has become one of the most respected gold IRA companies in the country. If you’re looking to protect your hard-earned savings with gold, call Goldco today to learn more about how gold can help you protect your assets against the threat of rising inflation.

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