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
1 Comment
1/26/2022 08:23:50 pm
A very well written article with informative information about how to position yourself against the threat of inflation. It's actually no longer even a threat; it's a reality.
Reply
Leave a Reply. |
AuthorNews & Updates are written by myself or when shared from the industry, credit is always given to writer. Rob Archives
February 2022
Categories |