Gold vs Inflation

News about inflation is everywhere that you turn at the moment, and it has us (and everyone else) asking the question – is Gold a good option to secure the value of your cash in the future? Well, in short – it is a good option, but why? Even more so why does it seem that not many investment journals or sources are speaking out about the value of precious metals compared to traditional assets? The term traditional asset seems as though it has been skewed with modernity, after all you can’t really get more traditional than something which has been an investment since the beginning of human civilisation… I don’t think that the British Monarchy was holding the S & P in the 14^thcentury. Everyone has their thoughts, opinions, and own biases towards the subject however one does wonder how with all the historical data we have on precious metals they still often seem to be ignored.

Historically speaking, Gold has held its value well over time and often performs well during periods of higher inflation, so much so that it has been synonymous with phrases such as “hedging” against inflation and this relationship is often depicted in graphs and charts in the media. One should keep in mind that these charts can be biased and skewed towards short-term data – for instance, if you bought a gold coin from KJC in 1995 it would have cost you around $500 AUD. That same coin today would be worth around $2500 give or take. In comparison, if you were to have just kept that $500 in pure cash banknotes you would still have $500 in cash and that same amount of money would buy you a lot less today than it would have in 1995. Therefore, in the span of just 30 years Gold has increased about 500% while at the same time inflation has increased approximately 650% over the last 50 years. It is important that people zoom out and consider the long-term data as opposed to data limited to the last 6 months to get a true understanding of what is going on so that they can make informed decisions about their investments in the long-term.

It can be difficult to find relevant, helpful, and unbiased information when researching ways to keep your money valuable. There is a noticeable lack of information available about how precious metals and other assets outside of modern investments in the stock market, such as non-traditional assets can benefit the investor. Non-traditional assets have been historically proven to be the best way to keep your money safe from rising inflation. These non-traditional assets include things such as property, art and rare coins and ofcourse bullion – many of which are viewed by some to be a wiser long-term investment than investing in the stock exchange.

I’ll leave you with a quote from J.P. Morgan “Gold and silver are money, everything else is credit”