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Want Stable Purchasing Power? Buy Gold and Silver

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Gold represents stability.

Buying gold makes a lot of sense as historically, gold holds its value. It also maintains a relatively constant level of purchasing power, especially when compared to the US dollar.

In 1976, University of California Professor Roy Jastram completed a long-term analysis of gold’s purchasing power stretching all the way back to 1560 and published his finding in The Golden Constant: The English and American Experience, 1560-1976. He found gold’s purchasing power remained remarkably stable over that period, as reported by the London Telegraph.

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Professor Jastram found that, over a period of more than 400 years, gold had proved an effective store of value and an ounce would usually buy a good, but not luxurious, outfit of clothes.”

Jill Leyland updated the book in 2009. Of course, there have been peaks and valleys, most pronounced after the US went off the gold standard. We saw two significant spikes in purchasing power since 1971, along with some dips. But overall, the precious metal has maintained a remarkably stable level of purchasing power over time.

This becomes particularly evident when placed in context with the purchasing power of the US dollar. The greenback has done nothing but drop since the creation of the Federal Reserve.

Since 1913, the purchasing power of $1 has dropped to less than 5 cents, a nearly 96% decrease. We illustrated just how bad currency debasement has gotten when we pointed out that plastic pennies now cost more than the real thing.

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Buying silver also makes a lot of sense. Why? because not only has gold retained its purchasing power, silver has as well.

As we recently reported, you can see the stability of silver’s purchasing power in the context of the push for the minimum $15 per hour wage. In 1964, the minimum wage stood at $1.25. In other words, a minimum wage worker earned five silver quarters for every hour worked. Today, you can’t even buy a cup of coffee with five quarters. But the melt-value of those five silver quarters stands close to $15.

This vividly illustrates currency debasement. In terms of purchasing power, the value of the silver remains relatively stable, but the value of a dollar shrinks. The long-term rise in the price of silver reflects this reality.

Historically, owning physical gold and silver provides a means to maintain your purchasing power in the face of central planning and currency debasement.

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