Ask anyone on the street and more than 90 percent of them will give you an inaccurate response. This simple term might be extremely difficult to grasp, yet it’s very simple.
Henry Ford a business magnate and the founder of Ford motor company quoted in the earlier 20th century “. It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning”.
The definition of inflation: 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 general term this is correct. Here are a few examples:
On January 4, 2000, an ounce of gold cost $282. Ten years later, on December 30, 2010, the exact same ounce of gold cost $1,405 an ounce. In the last decade, when measured against gold, the U.S dollar lost 398 percent of its value. A significant depreciation in a short amount of time. On January 4, 2000 oil was $25 a barrel. By December 31, 2010, oil was $91 a barrel. In ten years, the price of oil has shot up by 264 percent. Yet the government keeps mentioning that there’s no inflation.
A smart individual would ask:
• “What will be the price of an ounce of gold in 2020?”
• “How much will a gallon of gasoline cost at the end of the decade?”.
• “What will food cost in the next ten years?”.
As you can see, those who invested in gold in 2000 when the price was about $273 an ounce had an edge against inflation.
As inflation is rising and the dollar is depreciating, the gap between the haves and the have-nots will increase. The middle class will become poorer as the years goes by.
Those who save in fiat currency will be the biggest losers. Those who invested in gold will be the biggest winners. Gold has maintained its value for more than 5000 years. It might not be the best speculating asset, however it's known as the best insusance for your wealth.