How The Value Of Money Is Eroded by Inflation

Inflation is eroding the value of our savings

These days, the Dollar doesn’t stretch as much as it did before. Your money might not be able to go as far as it used to go in the past. It all has to do with inflation. You may have heard a lot about inflation going high butt what exactly is it? Inflation defines the steady increase in prices and a decline in the power of currencies. For instance, think about the price of a movie ticket in the 80s. It probably cost you around $1 for a cup of coffee fast-forward to 2023 and a cup of coffee costs $4. You can buy fewer movie tickets now than you could have bought a few decades ago.  

Inflation erodes the economy and the strength of the local currency but it also brings other assets under the spotlight as possible like gold. When inflation is high, most investors turn to gold and silver bullion. If you are wondering what to do with your money, the simple and straightforward thing you can do is to buy bullion Brisbane.

Think of inflation in a broader sense as something that affects any sector or industry, in fact, it affect a country’s whole economy. If left unchecked, inflation can rise to dramatic heights and decimate a country’s economy. Take Venezuela: In 2018, inflation rose to 1,000,000% rendering the currency useless, collapsing the economy and causing a massive exodus of citizens.

How do we measure inflation?

Most countries measure inflation by measuring the CPI (Consumer-Price-Index), PPI (Producer-Price-Index) and the Personal-Consumption-Expenditures Index (PCE). These are indeces that economists use to measure inflation. Economists use all three indices to get a broader picture of what is happening.

Can Inflation be beaten?

Inflation is one of those things that no individual can predict and once you find yourself in an economy where inflation is high, even if you have millions of cash in the bank, that money will lose its purchasing power. In an inflationary economy, the value of currency falls. There is something you can do though. Instead of putting your money in an investment account you can beat inflation by investing in assets like gold and silver.

Many people buy bullion Brisbaneas an inflation hedge. Gold and silver are popular assets however, there are no absolute guarantees. The price of gold increased between April 1968 and 2020 at an average of 7.6% per year. Yet the value of gold dropped by 28% and then 12% from 2013 to 2015 which put the safe-haven status of gold into question

The price of gold and silver can fluctuate for various reasons including supply and demand, monetary policy decision that governments make and the general movement of currencies across the globe.

This is because the gold price can fluctuate wildly and is because affected by other factors such as currencies, policy choices made by central banks and the supply and demand dynamics. Acquiring bullion comes with challenges too. Storage and security is one of them. Besides that the benefits outweigh the draw backs so if you want to survive inflation then you should definitely consider buying bullion.

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