American consumers are feeling the pain of inflation today more than at any time in the last 40 years. As of December 2022, Inflation rate rises to 6.5% From gas stations to grocery stores, household purchasing power is rapidly declining.according to CNNThe average American household was paying more than $709 a month more in 2023 than in 2021 as the cost of essential goods soared.
Paul Stone, Precious Metals Dealer Chairman and CEO colonial metals group, believes that inflation is a destroyer of wealth. He explains: “Inflation is a financial disease that has as real an impact as an epidemic or a virus. Over time, it can destroy your hard-earned savings and reduce the value of your money. For investors who want to protect their assets from inflation, Stone suggests allocating some of their savings to gold and silver, assets that have been used as stores of value for more than 5,000 years.
Inflation threat intensifies
The latest Consumer Price Index report shows inflation has fallen slightly to 6.5%, but most economists do not expect significant easing in 2023. They expect inflation to remain well above the Fed's 2% target next year as food, rent and prices remain high. Medical and fuel. A 2022 survey by the Harris Poll found that 75% of Americans believe inflation will continue to rise. This expectation fuels further inflation as people stock up on goods in hopes of higher prices in the future.
Paul Stone sees today's rising prices as part of a global debt glut with inevitable consequences. “When a government prints unlimited money to cover unchecked spending, it is bound to cause inflation to skyrocket and the value of the currency to fall, just as it has done for centuries,” he said. ”, he analyzed. He added, “The math doesn't lie. Since the Federal Reserve was established in 1913, the U.S. dollar has lost more than 97% of its purchasing power.”
How precious metals can help hedge against inflation
Investors have turned to gold and silver to preserve their wealth through centuries of financial turmoil, from the Roman Empire to Weimar Germany. Unlike banknotes, these precious metals do not deteriorate in the printing press. Supply constraints also support its value. Over 60% of institutional investors currently use gold to hedge against inflation risk.
Paul Stone believes that precious metals are the necessary “inflation insurance” for today's portfolios. He advises investors: “Past performance is no guarantee of future results, but if you look at the last 5,000 years, an ounce of gold has bought roughly the same amount of bread or milk throughout history. Why that will change in the future. With current inflation rates at multi-decade highs, history suggests precious metals will shine even further.
Precious metals like gold and silver can protect against inflation, but not all precious metal products are created equal. Certain factors such as purity, liquidity, divisibility, and storage costs determine its effectiveness as an inflationary safe haven.
Paul Stone cautions customers to only obtain IRA-approved coins and bullion bars from mints such as the Royal Canadian Mint. He explains: “We ensure that our customers own investment grade gold and silver bullion coins and bars to maintain maximum liquidity. We need a fiat product that has value.'' Stone also advises holding metals privately or through segregated vaults rather than joint accounts.
Above all, precious metal products must meet a minimum purity level, i.e. 99.9% or higher in the case of gold and silver. This ensures the essential melt value and liquidity that investors need for a reliable inflation hedge in times of crisis.
Inflation is expected to remain painfully high in 2023, so investors need to protect their savings from further loss of purchasing power. As Paul Stone warns, “Inflation is ongoing and could get much worse before it gets better. But precious metals have been around for thousands of years, even during all kinds of economic turmoil. It helped me preserve my wealth.'' By allocating a portion of their assets to physical gold and silver, especially investment-grade coins, investors can reduce the erosion caused by inflation. Although precious metals are not immune to price fluctuations, they have historically been a reliable haven from the storms of inflation.
