We looked at savers and stock index fund investors in the last two posts. Savers are screwed. They’re up the creek with no paddles and a giant hole in their canoe. Investors have a fighting chance, but it’s a tricky game that takes a long time to achieve real wealth through index funds alone. Are there any other investment vehicles that have performed historically well in a high money creation era?
Let’s look at that shiny metal. Gold has always been deemed a good hedge against inflation. Gold has performed well when you compare its chart to the purchasing power of the US dollar. But so has just about everything else! From 2008 to the date of writing this in 2022, the price of gold has slightly more than doubled, from $800/oz to $1,650/oz. That means it has woefully underperformed stocks. Moreover, it’s roughly the same price per ounce now that it was 11 years ago. Even worse, it’s roughly double the price it was 42 years ago.
But 2022 is the year to shine for gold, right? During this period of elevated inflation, surely gold has performed well. So far, gold is down 8% for the year. When it comes to gold and looking at the data, I have to be honest. I feel like Mugatu in Zoolander when I hear support for gold: “I feel like I’m taking crazy pills!”
If you’re extremely wealthy and don’t want to take on the risk of the stock market, gold has done a decent job at preserving your wealth while the dollar has been so brutally debased. But younger generations have no wealth to preserve. They’re trying to generate wealth. And gold simply doesn’t achieve that.
What’s The Winning Move?
So, is there a solution? There’s never just one solution, one cure all, especially with the complexity of economic forces at play and the multitude of issues confronting different groups of people in the current system. But is there something that gives people a realistic chance at financial freedom? Is there something that, with some education and the correct perspective, can tip the scales and give the average person a real shot at getting ahead in this era of currency debasement?
You better believe it, sister. We’ll take a look at exactly that in the next post.
Thanks for reading! If you enjoyed this, check out the other articles and don’t forget to follow me on Twitter @andrewdfarrar for up-to-date crypto content. If you haven’t already checked it out, my book, The Modern Investor, is up for sale on Amazon! It gives a much more complete and entertaining view into the digital asset market. In these crazy times, it’s never been a more important time to learn about this new asset class.