Inflation tends to make your money less valuable than you think it is. It is almost like a shadow. Inflation can erode your money’s value, so you have less purchasing power.
Certain assets will rise with inflation, like gold. What characteristics make gold rise with inflation? Learn why US Money Reserve gold rises with inflation.
Fake vs. Real Wealth
Oftentimes, stock traders talk about “paper wealth.” If your Apple stock increases from $50 to $100 before you sell it, you have “paper wealth.” You don’t have real wealth until you sell your stock at $100.
Inflation creates a sort of “fake wealth.” Unfortunately, Americans think that their dollars are more valuable than they are. Inflation increases can lead to many problems.
Unchecked inflation can lead to an inability to properly gauge prices. This could impact individuals, companies and governments. It could be difficult to determine if its budget is sufficient when prices rise dramatically.
There is a difference between real wealth and fake wealth. The problem with inflation is that sometimes, it is fake wealth. Why?
When a construction firm digs the foundation for a home, it is doing real work. When it puts up the wooden infrastructure, it is creating a brand new house. This productivity creates real assets for the economy.
When a business takes a sign for eggs that says $1.00 and changes it to $2.00, has it created any new wealth? No. That is one of the problems with inflation, it can be fake wealth, at times.
Gold is Tangible
Can anyone create any new gold out of thin air? No. Gold must be mined or recycled.
You can find gold coins that used to be in circulation at US Money Reserve. There are also proof gold coins that were never in circulation. These are in pristine condition.
The thing about gold is that its price is not manufactured. It cannot be produced by any factory. It is not found in only one nation.
Gold is a commodity. Commodities are real tangible items. Commodities include gold, silver, wheat and orange juice.
Commodities are the raw materials used to manufacture finished goods. Businesses need these raw materials to create the electronics, computers and automobiles that you use every day. As inflation rises, it might lead to the rise of input prices.
That is why gold rises with inflation.
Gold is kind of a mirror on inflation. Gold can reveal whether the inflation is fake or real. Gold can show whether it has led to increased productivity, or whether it is full of hot air.
The US Money Reserve can explain all that you need to know about gold. It is a trusted source of information. If you are worried about inflation, then gold might be a good way to hedge your bets.