How Does Gold Investment Protect You from Inflation?
When inflation occurs, the prices of goods and services in the economy begins to increase at a higher rate than usual. This means that for the same amount of money (let’s say $20) you are able to buy much less than you were able to in the past.
To save their wealth from decreasing in value, people often invest in assets when inflation is on the rise, and gold is a popular option when doing this. Here’s how gold can save you from the dangers of inflation.
Gold as An Inflation Hedge
An inflation hedge is an investment in an asset that is supposed to control the value of the money invested, despite inflation. Gold is a great inflation hedge because historically, in the event of inflation, gold has often increased in value rather than decreased.
This means that if you invest in gold during inflation, the gold will slowly become more and more expensive, making it worth much more than what you bought it for. When the time comes for you to sell it, you’ll make much more money than you spent.
Gold Prices during Inflation
According to economic theory and research, when inflation occurs at a certain percentage, the prices of land and gold also increase at an equal rate. Research also indicates that through the past decade, however, rather than rising at an equal rate, the price of gold has risen much more in proportion to the rise in prices during periods of inflation.
This disproportionate rise in gold prices makes it an even better investment in anticipation of inflation—so much so that even an increase in the expected rate of inflation causes the price of gold to increase considerably.
Where to Invest in Gold
Investing in gold will not only save your money from devaluing during inflation but will increase the value many fold. Your options should include physical cold, paper cold, jewelry, coin schemes and saving schemes. We’d suggest opting for physical gold or coin schemes and choosing a reliable online seller who is bound to give you a good price.