This is the
Inflation Hedge Web Page. Just a small article
that will maybe help you understand the need to invest some or all of
your
savings in items that will grow in value as inflation progresses
upward. Do you
really think inflation will diminish? If you do, just go ahead and
click
elsewhere because this is not for you. If on the other hand you believe
that
inflation will grow even more rapidly in the years to come go ahead and
read below,
it might save your finances for the future.
Inflation is defined by Webster's as "a continuing
rise in the general price level usually attributed to an increase in
the volume of money and credit relative to available goods and
services." In other words there's more money than stuff you can buy. Traditionally, the wealthy has put aside goods and
commodities that keep their value steadily, ossea, things whose price
increases directly with inflation. A good example is GOLD. Most
currencies are backed by the gold "standard". This means that a
specific currency is worth a certain amount of gold. The inflationary
index is what determines by what amount of gold, and in some instances
silver, a currency’s worth diminishes. So, your money buys decreasingly
less goods. One curious result of inflation is that property
prices seem to increase. Notice I wrote "prices" and not "values". The
markets use semantics to confuse people. To illustrate this we'll buy a
house during normal times and then sell it during an inflationary
period. Let’s suppose that a house was purchased for $60,000 in 1985.
Today this house today is worth $180,000. The market gurus tell you
that the reason for this is that now you have equity in your house.
You're happy thinking about where you'll spend the extra money.
Unfortunately, inflation has doubled, or even tripled, all the other
prices. Gasoline you bought for $1.30 in 1985 now costs around $4.00 so
it tripled. Your house's price tripled, yet money devalued three times
so you actually didn’t make any money in your house. Another way of
looking at this, which might be a bit clearer, is by equating the
dollars that you used to buy your house in 1985 to today's dollars. You
do this by multiplying what you paid for your house by the inflation
index and this comes up to $180,000. If you sell your house to buy
another one with the money, you’ll pay triple for the new house anyway
since it’s the money that has lost its value. That's what inflation creates, a ballooning effect
that is easily misunderstood by the average person. How can anyone
counter this effect? Well, as I wrote before some people use Gold and
other Commodities that do not loose their value during inflation.
Notice I said "value" and not "price". The fantastic thing about those
commodities is that their price is directly proportional to the
inflationary index and sometimes even higher. Why? Well, because in
many cases they define the "value" of your money. If you look at the
price of gold when this was written you'll see that it's getting ready
to go over $1,000 per ounce. Does this mean that Gold's value
increased? Not really, the value stays the same; its price is what has
risen. If you bought gold when it was at $340.00 per ounce
you would be actually getting close to triple, or more, its worth
today. Gold doesn't really change the prices of consumer goods, but
you'll have an edge because your money has been exchanged for something
that increases in value with inflation. The same thing happens with a lot of different
commodities. Other good examples are diamonds and precious stones.
These also keep their integral value even though your money keeps going
down in purchasing power. Some people have suggested the use of
diamonds as a high denomination currency. You could also use Platinum,
Pearls, Other Precious Gems, Silver, and more. If you wish to hedge your money against inflation
now is the time to invest in High Value Commodities. And I'm not
talking stock market; I'm talking "real" things locked away in your
personal vault. These will keep your wealth safe and intact even if the
national currency drops to unimaginable fathoms. The longer you wait
the lower the value of your money. It's up to you to take proper action
now. Here's a website that might provide you with a
hedge against an overrun inflation.
INFLATION