Inflation is HERE - and what to do about it!

Even before Covid lockdowns hit, we have been bracing for inflation. All of the lost productivity, the crazy monetary policy, the spending bills that Covid ushered in made us dread inflation even more. We wondered when the avalanche of dollars created after the housing crash would come flooding into markets. Covid was perhaps that gunshot that shook the avalanche loose.

 For a time, all of those newly created dollars drove up prices on Wall Street with the “unicorn” phenomena. Easy money has rained on Wall Street and Silicon Valley like a torrential downpour. The scandals associated with Elizabeth Holmes of Theranos, and Billy McFarland and the Fyre Festival and the implosion of WeWork are just a few examples of "cheap" inflationary dollars not being at all cautious about what malivestments they jump into.

The stock market is one thing…

Those dollars stayed on Wall Street though, reminding the diligent that its easy to get fooled and a fool and his money are soon parted. A few were fooled right out of some retirement savings and other wealth they had built up.

It’s another thing when that inflation hits the grocery store and the gas pump. Thanks to stimulus checks and other forms of government giveaways, a tidal wave of money has hit Main Street driving up the prices of everything.

Afterall, even having retirement savings these days is a status symbol. Most Americans are living paycheck to paycheck and struggling with debt. So once those already struggling are hit with sudden price increases of things like bread, milk, eggs and gasoline, there will be a lot of human suffering and a lot of stress in the system.

Official CPI stands at an alarming 9.4%. Shadow Stats puts it north of 15% using classic statistical methodology. That is a whole lot of pain in the economy right now.

But there is a stop-gap measure you have at your disposal to limit the flow of purchasing power out of your hands. GOLD.

Consider the gold to income ratio.

In 2020, the median income in the US was $68,000 a year, which could buy 38 ounces of gold at the time. In 2008, the median income could have purchased 57 ounces, and in 2000 when the annual median income was only $41,000, they could purchase 157 ounces. Note that in the past 20 years the median annual income has gone up by just 66% while the price of gold has jumped over 580%!

In 2000, you could have purchased four times as much gold with the median income than you could buy with today’s median income. That’s how much your money has lost in value. WOW!

In 2021 median income decreased to $67,463, but gold is currently at $1900 an ounce! That means the gold to income ratio has dropped to 35.5 - 2.5 ounces less in just one year! This metric shows how fast that avalanche of inflation is coming at us, folks.

There are 5,000 years of recorded history showing the role of gold as a valued currency. How will you build and preserve your hard-earned nest egg? You can sit back and let inflation erode your savings, or you can be proactive and invest a portion of your hard-earned money with a time-tested physical asset like gold.