Rapid inflation: Gold as inflation protection

Rapid inflation: Gold as inflation protection © "Paul", CC BY 2.0;

Heating, food, gasoline. Everything is getting more and more expensive. And rapidly. In April 2022, inflation in Austria rose to a value of 7.2% compared to the same month of the previous year, according to Statistik Austria. An inflation rate at a level last reached in the early eighties in the shadow of the oil crisis. In 2021, consumer prices had already risen by 2.8%, the highest rate in more than 10 years.

However, inflation not only makes everything more expensive, the increase in the price level also reduces the value of the assets saved. How can savings be protected against the loss of value?

With gold against inflation

Inflation means nothing other than that goods and services become more expensive and the purchasing power of money decreases. In short, the money in your wallet or bank account becomes worth less. For the classic average citizen with assets in a savings account, this means a creeping expropriation.

When money loses purchasing power, it is necessary to save what can be saved. To protect their own assets, savers and investors can invest in tangible assets: In addition to real estate, these include precious metals, especially gold and silver.

"The classic tangible asset is real estate. But buying an apartment or a house as an investment simply doesn't pay off for most people. With precious metals, on the other hand, you can invest even smaller sums sensibly."
- Walter Hell-Höflinger

With a gold coin or bar, even smaller assets can be easily hedged. Gold is easy to transport and store and, above all, can be converted back into cash at any time worldwide without any problems.

Gold is considered the most stable currency of all. Especially in times of high advancing currency devaluation, gold offers security and serves as an inflation anchor. It is therefore ideally suited for "economic self-defense". As a defense against the devaluation of your monetary assets.

Gold Price & Inflation

Unlike with money, you can afford the same today with a certain amount of gold as you could a hundred years ago: A well-known example of this is a high-quality two-piece men's suit: Today, 50 years ago, 100 years ago or even 150 years ago, you always got a good men's suit for the equivalent of 1 ounce of gold.

In times of increased inflation or even when there is an increased risk of inflation, investors increasingly take refuge in the "safe haven gold". Accordingly, the price of gold rises additionally due to this increasing demand and because the relationship between the currencies and the gold price changes due to the stable value of gold alone, in contrast to the loss of purchasing power of the euro or the dollar.

The further development of the gold price in 2022 will also depend to a large extent on the monetary policy of the central banks. In May 2022, the U.S. Federal Reserve last raised key interest rates in a relatively large leap of 0.5%, and the ECB is now also openly talking about an interest rate hike in the summer.

Whether these interest rate hikes can contain the consequences of a decades-long policy of cheap money remains questionable. In addition, with the consequences of the Ukraine war, the exit from Russian oil and gas, as well as the supply chains still disturbed by Corona, there are other factors that should rather support the gold price.

Hedge assets against inflation

Gold and silver are not suitable for short-term speculation. As a long-term investment, which has above all the purpose to secure the own fortune against inflation and loss of value very well. With an investment in gold you are always on the safe side! Gold is a permanent value due to its limited availability. This has been the case for centuries and will remain so for a long time. You can rely on that!

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