To no one’s surprise, the latest inflation figures that came out Friday hit the highest level seen since 1982. Prices year on year increased 6.8%, a further increase from the 6.2% mark seen last month. And month on month price increases were at 0.8%, an annualized rate of over 10%. These continued increases don’t bode well for the future.
The idea that this inflationary surge could possibly be transitory has finally been put to rest by the latest inflation numbers. Not only is the overall price level rising, but prices of goods and services across all different sectors are rising too.
This isn’t inflation that’s being driven by price increases in a few key sectors like food and energy. This is inflation that is impacting every single thing we buy, sell, or use in our society.
The implications for the future are ominous, as you could probably imagine. It wouldn’t be so bad if Americans were also making more money and able to afford the higher costs. But real wages have been declining for months, making the hit from inflation that much more painful for American households and families.
If you’re among the millions of people impacted by this rising inflation, you’re probably wondering how you can protect yourself against it. After all, this is the highest inflation we’ve seen in 40 years. We have entire generations of Americans who have no idea how to respond to something they’ve never really seen before. And even if you’re nearing retirement age, you haven’t seen an economic and investing environment like this since you were just out of college and getting started in the workforce.
As bad as things are right now, there’s every possibility that they could get worse in the future. This inflation isn’t transitory, it’s being driven by a handful of factors, every one of which remains in effect. And unless you start taking steps to protect yourself, the value of your savings could be severely eroded before all is said and done.
More Money, More Problems
At the root of this inflation is the Federal Reserve’s massive expansion of its balance sheet. Having purchased over $4 trillion in assets since last year with money it created out of thin air, all that money has made its way into the economy. And now we’re seeing the effects of that money creation.
More money chasing the same amount of goods will result in higher prices. And with such a massive injection of money, more than doubling its already bloated balance sheet, it could be many months before we feel the full effect of the Fed’s actions.
The fact that inflation has been running at annualized rates of over 10% for the past few months is a worrying sign that even 7% inflation rates may end up being lower than what we’ll see in the future. There’s no telling just how high inflation may end up rising.
While the Fed is hoping to end its asset purchase program soon, by the time it ends it will have likely added over $5 trillion in new money to the economy over two years. And the Fed is hoping to end its current asset purchases so that it can have room to make even further asset purchases in the future should it judge it to be necessary to stimulate the economy in the event of an economic downturn. So the likelihood of more monetary stimulus and more inflation could increase in the future rather than decrease.
How Will Inflation Affect You?
You’ve probably already been affected by inflation, every time you fill up your car at the gas station, every time you shop for food at the grocery store, and every time you have to buy just about anything. Your cost of living is going to increase, so get used to it. But can you afford it?
If you’re still working, your salary and wages likely haven’t risen enough to compensate for the rise in inflation. And there’s a good chance that your investments likely haven’t gained enough value either to overcome rising inflation.
With inflation set to continue rising, it’s imperative that your investment gains outpace inflation if you want to get ahead. But if inflation starts to rise into double digits, there aren’t very many portfolios that are going to be able to keep ahead of that, especially not if high inflation becomes entrenched or if stock markets end up crashing.
Since it’s been 40 years since inflation was this high, most investors today don’t remember what it was like to invest in a high inflation environment. They don’t remember how people back then invested, which assets they chose, etc. And quite frankly, with the developments in modern investing, not every strategy from back then would likely work today.
Gold and Silver Can Protect You
One strategy that could work today, though, is an investment in gold and silver. Gold and silver have a track record of gaining value during tough economic times. During the 1970s stagflation, for instance, both gold and silver’s averaged annualized gains were over 30% for the decade. And in the aftermath of the 2008 financial crisis gold nearly tripled while silver more than quintupled.
We’re currently entering an economic climate that could rival that of the 1970s, with millions of American workers still sitting on the sidelines while inflation is rising. If the 2020s end up being like the 1970s, gold and silver could end up performing just as well today as they did back then.
That’s why many people have already made the move into gold and silver. They see the writing on the wall and realize that the economy is set for a downturn. They remember the losses of 2008 and the collapse of the dotcom bubble in 2000 and they see the similarities between then and now. And they’ve decided that gold and silver are their best bet to protect their hard-earned savings and investments.
With a precious metals IRA, you can protect assets that you have in existing retirement accounts such as a 401(k), 403(b), TSP, IRA or similar account. By transferring or rolling over assets tax-free from your existing retirement accounts into a gold IRA or silver IRA, you can invest in physical gold and silver coins or bars, benefit from future gains in the gold and silver price, and still enjoy the same tax advantages as you have with your existing retirement accounts.
Or if you have money in the bank, or in cash or cash equivalents that are starting to lose more and more value to inflation, you can buy gold and silver directly, allowing you to take delivery of your precious metals and protect your wealth against devaluation.
No matter which way you choose to buy gold and silver, the precious metals experts at Goldco are here to help. With over a decade of experience helping thousands of customers just like you, Goldco goes the extra mile to ensure that your questions and concerns are answered and addressed before you buy gold and silver.
Goldco’s experts can help you through the process of buying gold and silver, from your very first questions to your purchase of gold and silver to the time you decide to take a distribution from your precious metals IRA. Don’t let your savings and investments lose even one penny more to inflation. Call Goldco today and start learning more about how gold and silver can help safeguard your savings.