Everyone is always talking about inflation versus deflation. We may be having a partial bout of deflation just now in some parts of life (houses, cell phones and computers, Walmart plastic crap) by there are strong price rises as well (health care, food, fuel, education, entertainment). So, we should probably just call it stagflation - same as in the late 1970s.
However, somewhat lost in the shuffle, is that the US dollar has been in a steady decline for over a hundred years. After Nixon took us off the gold standard in 1971, the decline really steepened for awhile. But, it has not turned up except for very brief periods. That is why the cup of java that you used to get for a dime or quarter, now costs $3 or $4 bucks. Things really haven't gotten more expensive - the dollar has just lost value.
Some even place the blame on the activities of the Federal Reserve promoting low interest rates and printing lots of money for the recent steep decline.
When we consider the true historical currency - gold - and compare it against the major paper currencies, even in the past decade we see a sharp decline.
The early effects of the flooding of money into the economy during the past decade made many people feel more wealthy for a short time as house prices went up. But, most of us have borrowed to the hilt and have become loaded with debt as our wealth has plummeted.
So, what to do in this time of declining value of holding cash or even low paying bonds?
One answer is buying a bag of gold or silver bullion coins (Eagles, Krugerrand, Maple Leaf). This used to be considered a "disaster preparedness" insurance policy. Now it makes just good common sense.
As you look at the increase in the price of gold just in 10 years, it has risen over 400% since 2001. That means if you had $12,500 in gold coins (about 50 ounce coins) at that time, it is now worth $50,000.
And when we compare it to the huge gold rise during the highly inflationary 1970s in the chart below (the gold line), we see that compared to that huge historical bubble, currently gold (blue line) is just on a steady rise as the dollar declines.
That is the thing about gold. It is the ultimate money. It does not change in value - only the paper monies issued by government slowly decline. All paper currencies issued during thousands of years became worthless. Gold maintains value and is almost indestructible.
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