Inflation and Currency Devaluation

Most Americans invest their retirement funds in U.S. dollar-based assets, vehicles like stocks or bonds. While on the surface this may sound like a good strategy, there are two major obstacles that can greatly reduce the purchasing power of our retirement assets: Inflation and currency devaluation.

Inflation is a wealth killer and it can eat away at your purchasing power and make it difficult for you to maintain your current standard of living.

For those who remember the 1970s and early 1980s, inflation was running wild in the U.S. and had a devastating impact on daily life. In 2023, inflation is back at levels not seen since the 1980s and is having a major negative impact on people and businesses. 

They called it the Great Inflation, as soaring gas prices, food prices, and clothing prices hit consumers hard. By 1980, inflation in the U.S. climbed to an astounding 14%. What would that mean for your retirement account if a similar situation occurs again as some economists warn? At 14% inflation, your account would have to grow 14% a year just to break even in real terms!

Massive Hyperinflation

While the government says that current inflation is high, those statistics do not include food or energy- Americans’ most inelastic expenses. Even now how much more do you pay for food at the grocery store? How much has your kid’s college tuition been rising? How much have your health costs been increasing in recent years? Can you imagine what your everyday prices would look like with ongoing, runaway double-digit inflation?

The U.S. government has set the stage and created the potential for another bout of massive hyperinflation in the years ahead.

The Federal Reserve’s schemes to juice the economy included a massive money printing operation which has pushed the central bank’s balance sheet from $850 billion prior to the 2008 financial crisis into a few trillion currently. There is a lot of excess money sloshing around in the financial system, which has the potential to unleash a crippling wave of inflation and may, in fact, have already done exactly that. Excessive money printing devalues a currency. More of anything makes it worth less.

Currencies rise and fall in value on the global marketplace—and sometimes quite dramatically.

Even the U.S. dollar, which is supposed to be a “safe-haven” currency, plunged over 41% from 2001-2008! That’s the equivalent of receiving your retirement statement and it showing a 41% loss! How could you make ends meet if your retirement funds were slashed nearly in half?

And the rest of the world is now getting in on our act.

Virtually every major country around the world has “loosened” their currencies. Germany and Spain actually had negative interest rates on their government bonds. The EU began their own version of Quantitative Easing and added over $1.2 Trillion worth of additional currency to help drive their stagnant economy. It is these policies that sparked an unexpected response from former Fed Chairman Alan Greenspan. Mr. Greenspan then said that gold is a good place to put money these days given its value outside the policies conducted by governments. When asked about where gold would be in five years, Mr. Greenspan replied “Higher.” When asked how much higher, he said, “Measurably!”

The Bottom Line

While you can’t control inflation and the constant risk of currency devaluation, you can choose retirement investments that will protect your wealth and act as a hedge against these corrosive forces. What is the answer for Americans trying to diligently save for a comfortable retirement?

Gold is a time-honored hedge against inflation and is a historical wealth preservation and growth tool.

Here is how it works. Whether you are in individual equities, ETFs, bonds, or mutual funds, your retirement distribution is returned to you in U.S. dollars. But, what are those dollars going to be worth in 10, 20, 30 years? Investors who save for retirement in a gold IRA can take distributions in physical gold, which can’t be devalued by government printing presses. The gold can then be converted into dollars as needed for spending in your retirement.

Gold could help you diversify, preserve and grow wealth without the fear that a government can devalue your retirement account with a printing press. Gold is the world’s first currency some may say the only true currency today.

Advantage Gold is dedicated to empowering and educating investors just like you to help you save towards the comfortable and care-free retirement. Advantage Gold is committed to educating you on the choices for your retirement assets and pledge to be there for you during the lifetime of your account. We are the industry leader in precious metals IRA rollovers and we make it easy to add precious metals to your retirement.

Getting started with a Gold IRA is easy. Our experienced executives are here to guide you, step by step, through the entire process.

Talk to an IRA advisor about how to roll over your 401(k) into a Gold IRA by opening a self-directed IRA account, contact us or call us at 800-341-8584 today.