15
Dec
A Storied History of Inflation & Deflation
Through the history of the United States, we have weathered through periods of both inflation and deflation, but the real story is hidden until you dive deeper into the context. What truly matters through the ups and downs is your buying power. The key to preserving and even enhancing your purchasing power is to allocate your assets into a store of value that operates independently of the dollar, which is exactly what gold does. This is a lesson drawn from history.
During the period from 1929 to 1933, the U.S. experienced deflation. Commodities saw a 31% decline in value. The purchasing power of silver decreased by 5%, but the purchasing power of gold, remarkably, increased by 44%.
Fast forward to the period of 1959 to 1979, and inflation was the prevailing economic theme. Commodities soared by 158%, silver's purchasing power shot up by 380%, while gold's purchasing power saw a significant rise of 240%.
However, a pivotal moment arrived in 1971 when President Nixon took the USA off the Gold Standard, setting the stage for the devaluation of the dollar and the remarkable gains in the buying power of precious metals. Back then, gold was priced at around $40, equivalent to roughly $280 today when adjusted for inflation.
Now, let's focus on the 21st century. From the year 2000 until today, the dollar's purchasing power dwindled, with a dollar from 2000 only capable of buying 56% of what it could back then. Gold, on the other hand, stood at approximately $279 per ounce in 2000. Today, it hovers above $2,000 per Troy ounce.
To illustrate further, consider this: if you had $1 million in cash from 2000, its purchasing power would have significantly diminished today, equivalent to just a fraction of its original value. However, had you invested that $1 million in gold in 2000, which would have amounted to roughly 3636 ounces, today, that investment would be worth more than $7 million, showcasing the substantial growth and wealth preservation potential of gold.
This century serves as our prime example due to its relevance, but the pattern holds true across various time periods since the 1600s. Gold consistently demonstrates its resilience as a safeguard against the erosive effects of inflation and devaluation, making it an indispensable asset in protecting and growing your wealth across diverse economic conditions.
During the period from 1929 to 1933, the U.S. experienced deflation. Commodities saw a 31% decline in value. The purchasing power of silver decreased by 5%, but the purchasing power of gold, remarkably, increased by 44%.
Fast forward to the period of 1959 to 1979, and inflation was the prevailing economic theme. Commodities soared by 158%, silver's purchasing power shot up by 380%, while gold's purchasing power saw a significant rise of 240%.
However, a pivotal moment arrived in 1971 when President Nixon took the USA off the Gold Standard, setting the stage for the devaluation of the dollar and the remarkable gains in the buying power of precious metals. Back then, gold was priced at around $40, equivalent to roughly $280 today when adjusted for inflation.
Now, let's focus on the 21st century. From the year 2000 until today, the dollar's purchasing power dwindled, with a dollar from 2000 only capable of buying 56% of what it could back then. Gold, on the other hand, stood at approximately $279 per ounce in 2000. Today, it hovers above $2,000 per Troy ounce.
To illustrate further, consider this: if you had $1 million in cash from 2000, its purchasing power would have significantly diminished today, equivalent to just a fraction of its original value. However, had you invested that $1 million in gold in 2000, which would have amounted to roughly 3636 ounces, today, that investment would be worth more than $7 million, showcasing the substantial growth and wealth preservation potential of gold.
This century serves as our prime example due to its relevance, but the pattern holds true across various time periods since the 1600s. Gold consistently demonstrates its resilience as a safeguard against the erosive effects of inflation and devaluation, making it an indispensable asset in protecting and growing your wealth across diverse economic conditions.
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