Top 5 Reasons to Consider Gold in An Inflationary Period
The comments below are an edited and abridged synopsis of an article by Rick Mills
Gold has a rich history, and has always been prized for its artistic and cultural value.
But buying gold goes beyond yearly celebrations or the need to display affluence; people also see it as a form of investment and growing their wealth. This is especially true during times of high inflation, when the cost of living rises and the value of currency depreciates.
The US economy is currently going through an extreme inflationary period, with its annual inflation rate reaching 7.9%, the highest on record in 40 years.
Since the start of 2022, inflation concerns have jump-started a fresh wave of gold buying, which nearly took the precious metal past its all-time high of $2,070/oz set in August 2020.
Demand for gold-backed investment products also surged, with gold ETFs seeing net inflows of 187.3 tonnes ($11.8 billion) in March, taking total holdings just below the record $240.3 billion of August 2020.
Mills discusses gold as a store of value; gold as an inflation hedge; diversification with gold; economic and political instability; and rising government debts.
“Offering more support for gold is the massive public spending spree, especially during disruptive periods like the Covid crisis, that have led to excessive government debt.”
“While increased spending may help support economic recovery in the near term, major economies like the US are actually accumulating debt at a faster pace than their economic growth.”
“The crushing global debt burden is likely to weaken major fiat currencies (like the US dollar) and gold can help protect investor wealth. Historically speaking, gold has appreciated as US federal debt levels rise.”