As we all experience the painful rise of inflation across all goods and services, we must all recognize that only governments benefit. The gradual degradation of currency was slow and went on relatively unnoticed in the past. Now, it seems to be on everyone's mind and news channels worldwide.
It is essential to have a clear understanding of who controls our currency's value, what they have done to cause the rise, and how they can fix it. Over the past two decades, low-interest rates and the ability to borrow multiples more than we should have led to Canada's out-of-control housing bubble and, most noticeably, a spike in inflation. So, how does that equate to inflation being stealth taxation? As the value of our dollar declines due to prolonged periods of low-interest rates, the cost of goods and services rise along with the number of dollars we pay for PST & GST. We spend more and earn the same. Inflation increases in an environment of interest rates; low rates trigger a flood in the market of dollars as individuals, institutions and governments. Central banks create money and inject it into the system, expanding the money supply and eroding the value of each dollar it prints. The opposite happens when interest rates rise; fewer dollars created means the money supply shrinks, resulting in fewer dollars needed to pay for goods and services. This summary is a simplified version of how sound monetary policy works to keep rising asset prices and inflation in check.
The most important thing you can do to counter the erosion of our purchasing power is to add gold and silver to our portfolio. Without diving too deeply into why gold and silver perform their wealth preservation/creation role, think of it like this. Physical gold and silver do not carry counterparty risk, they are liquid on all markets, and their value comes from supply and demand. You also have two different options available for ownership, physical delivery or stored product. One is more liquid and less expensive to own than the other, but personal preference tends to prevail again. This decision should come down to liquidity.
By adding gold or silver to your assets, you would now control a physical monetary metal that has historically moved counter to USD and has appreciated with the dollar under certain circumstances. For Canadians, this is especially attractive during times of high or rising inflation.
Gold & Silver Price (January quote over 5 years in CAD)
2018 – $1742.30 Gold – Silver $20.89
2019 – $1600.90 Gold – Silver $20.11
2020 – $1950.00 Gold – Silver $26.89
2021 – $2425.70 Gold – Silver $31.92
2022 – $2293.20 Gold – Silver $28.74
Learn more about how to own precious metals visit www.internationalgoldvault.com
Written by - Rob McInerney
The world is changing by the minute, with that, we must attempt to remain one step ahead. As we know it to be, money is also changing by the moment; inflation has dramatically impacted our purchasing power and increased demand for wealth preservation assets.
Some investors have already converted some of their wealth into physical bullion, crypto currencies or alternatives to preserve the wealth they’ve worked so hard to create. Whatever you decide, please be sure to verify that the assets you choose will
maintain a high level of liquidity. Having worked in the precious metals business for more than 15 years, vaulted gold and silver have proven to provide unmatched liquidity, including during a crisis.
Outside product is bullion that has been withdrawn from depositories and delivered to an individual or institution and is no longer stored in an approved facility. The moment product leaves the vault the owner assumes responsibility for that product and its integrity. This product is now subject to an assay, fees and potential delays. Consider all delivered products a part of your estate, with no intentions to trade or
profit from ownership. This product loses some liquidity in this form and takes on a different role from the vaulted product. The Perth Mint no longer accepts outside product for storage, and you must sell your product back to the Perth Mint at spot minus assay and buy new product with the going premium to “deposit” product for storage. I believe, as precious metals rise, all outside product globally will become
subject to a very similar set of rules imposed by all storage facilities. If you own bullion to preserve wealth and liquidity, be sure to do so in a legitimate, secure facility with market access. Anything less could turn out to be a very costly mistake.
Should you have any questions about this post, please contact us for clarification or assistance. We can help you vault, deliver or finance bullion.
Written by - Rob McInerney
International Gold Vault Ltd.