The free Casey Research newsletter “Casey Daily Dispatch” has put out another great article on gold this week. I highly recommend people new to the gold and silver market to take a good look. It puts all the world markets in perspective as it prices everything in terms of Gold rather than fiat money which depreciates ever so quickly in todays environment. When it comes to preserving your wealth and attempting to cash in on the current crisis unfolding in front of our eyes, its key to understand the fundamentals of precious metals such as gold and silver (and their stocks counterpart).
For more information on this I suggest you check out two of our previous posts Why Gold Stocks Will Someday Sell for $200 and Gold is Money.
Gold Is the Benchmark
Whether they realize it or not, the same thing is happening to most people’s investments. Over time, real returns are diluted because of inflation. The only reliable way to measure the value of investments is in terms of a financial intermediary that cannot be inflated: gold. That way, investors can tell how they’re doing in real terms.
This has practical ramifications for all of us. Someday, we (or our heirs) are going to spend some of the wealth we are accumulating. How much we can actually buy with our gains will directly depend on how hard inflation has hit whatever our investments are denominated in. A 15% gain in dollars is only 9% in real terms if USD inflation was 6% during that time frame. A money-market return of 1% is a losing investment if denominated in something inflating at 3%. In Andrea’s case, by keeping all her funds in dollars, her 20% gain turned into a 16% loss in purchasing power.
– By Jeff Clark, BIG GOLD
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