Investing in gold and silver pieces can be very profitable in inflationary times. But what is inflation? When talking about inflation and deflation we are really talking about the expansion or contraction of the money supply. The main symptom of monetary inflation or deflation is the rising and falling prices which are commonly referred to as price inflation or price deflation. With inflation everything gets more valuable except our currency.
But why worry about inflation you say? After all, in August 2010 the US government statistics reported the year to year consumer price index to only be up 1.1%. And we normally don't even worry about an inflation rate that is this low.
With such a low value the average person hasn't even considered that hyperinflation is a possibility.
But let's look at some cold hard facts that the government tries to conceal from us in their method of calcul ating the CPI. The reality of a coming hyperinflation will become all too apparent. Hyperinflation is absolutely on the way.
We have always known that what goes on in the real world is a little different than what the government statistics have been reporting.
The government actually has an incentive for reporting lower CRI values. The lower figure helps when computing cost of living increases for Social Security for instance. And some things like flat screen TV's may actually be coming down in price, but what about those things we buy every day, things such as food or energy? Those prices have risen sharply over the last year.
Here are some reported figures from CaseyResearch.com. These are year over year changes for October 2010.
- Wheat up 74%
- Corn up 14%
- Oats up 68%
- Canola up 36%
- Heating Oil up 29%
- Gasoline up 25%
- Natural Gas up 15%
- Beef up 18%
- Pork up 60%
- Coffee up 27%
- Sugar up 44%
- Cotton up 66%
- Copper up 37%
- Gold up 31%
- Silver up 36%
- Yet the Aug CPI-U is only up 1.1%
On average basic food costs are up 48% over last year (measured in the commodity prices). Fuel has risen 23%, meats are up 39% and your favorite cup of coffee is up 36%. You may not be buying cloths or building materials every day but you saw those prices up also. This is why food and energy are ignored by the government in their CPI calculations. We are being scammed.
The value of gold and silver have moved up as well. So you see it is not just supply and demand issues on a few things. In general everything has seen prices rise. Price rises way above what is reported in the CPI. Most commodities are p erishable or hard to store, so its not practical to use them as protection against inflation. Coin gold and silver pieces are not like other commodities in that they have great value relative to their weight and are easy to transport and store so they also go up in value. This trend is very much in motion. It may be time for you to consider silver bars, silver rounds, or any gold and silver coins for that matter as the best alternative for your investments.
I hope I have got you seriously thinking about inflation and what I believe to be coming - hyperinflation. Do you really think the world bankers can continue to create trillions of currency dollars, backed by nothing, and expect inflation to be in control. Gold and silver coin values will continue to rise. Enjoy the journey. There are time s when cycles investing and precious metals investing can be a lot of fun.
