Gold Market Update: As We Go from Deflation to Hyperinflation

Most countries were not prepared to fight the coronavirus and have therefore crippled under pressure. The abrupt economic collapse due to businesses being shut down across the United States have led to mass hysteria. People are losing jobs, businesses are closing down, and others are using their savings and assets to see each day through.

Economic depression

A greater depression is expected this year with no silver lining in sight so far. The Fed has been responding to the situation by taking risks with their monetary policy like reducing the interest rate to 0%.

They are currently working to create hyperinflation in the country as it’s considered lesser of the two evils when compared to a deflationary monetary policy. Inducing hyperinflation enables them to fulfill their role, which is to redistribute income among the people and defer a systemic collapse for as long as possible.

Changes in monetary policy

The federal government created a significant amount of money to pay off debt. The balance sheet has, therefore, expanded vertically which leads to hyperinflation. Printing more money doesn’t mean you have more money, it only means the value of our currency is falling. This larger sum of money won’t matter when there is an exponential increase in prices.

The creation of money has driven stocks up and they have somewhat recovered from the crash back in March. While the stock market is expected to do better in future as a result, it will never be able to match the debt taken on.

Increase in demand for gold

As a result of hyperinflation, investors are now moving to tangible assets like gold. The market for gold is once again popular. Other precious metals are also expected to increase in popularity, like silver.

Investing in such assets ensures value, more so than hoarding cash or stocks. Due to the rising debt, other securities don’t hold much intrinsic value.

Gold and silver are transportable in comparison to other investments. Gold can be used for larger transactions, while silver is ideal for smaller transactions. It’s vital to mention that the difference between the paper price of gold and the metal has increased significantly. Its demand is currently high in the market, making it hard to obtain.

If you’re looking to invest in gold from a reliable source, get in touch with Orion Metal Exchange. We have been part of this industry for over 2 decades now. Speak with our representatives for buying silver and gold coins.

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