To understand the impact of inflation on the US dollar, it’s helpful to compare its purchasing power to gold over time. Fifty years ago, the dollar’s value was quite substantial, but over time artificially low interest rates and money printing by the Fed have helped erode the greenback’s potency. In contrast, gold’s unique ability to preserve wealth and purchasing power is easy to see when compared to the dollar over the same time period.
The following infographic shows the difference between two different savings scenarios:
- An American stores $3,500 in a safety deposit box in 1967 and takes it out in 2017.
- An American stores $3,500 worth of gold (100 oz) in a safety deposit box in 1967 and takes it out in 2017.
If each person then went on a spending spree, here’s what could they buy.
In his latest podcast, Peter Schiff explains how the Republicans’ newly unveiled repeal and replace plan for Obamacare will have many of the same failures as its predecessor. Having adopted the new moniker, “TrumpCare”, many mainstream Republicans are seeing the bill as an improvement over the Affordable Care Act. However, Peter sees it a little differently.
In his latest podcast, Peter Schiff looks at the latest moves in physical gold and gold stocks as a possible indicator that the market may be in the early stages of a bull run. A few weeks prior, Peter pointed out that gold stocks were selling off (down 4%) while the price of gold was rising at 2%, an inverse relationship that may signal a downward move in physical gold.
As we saw last week, that prediction came true with a correction in physical gold that sent prices down 3% or about $40 on Friday. Even though gold was down last week, gold stocks (GDX and GDJ) were overall positive. Monday also saw a decline in gold with a $9 drop and GDX stocks fell around 3.4%.
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On Thursday Bitcoin gained parity with gold for the first time, only to surpass it shortly after. The cryptocurrency reached a high of $1281.21 by 1 p.m. EST on the BTCUSD exchange, according to MarketWatch. The mainstream media is likely to hype the story, inspiring many to sing the praises of Bitcoin as a better investment than gold or other precious metals.
But before you trade your gold coins or silver bullion for Bitcoin, remember that cryptocurrencies have little in common to precious metals when it comes to value and volatility. Goldmoney contributor, Stefan Weiler, explains the problems of comparing precious metals vs cryptocurrencies.
Trump’s address to Congress might be a landmark event for his first 100 days. His softer, more focused tone inspired markets yet again. The Dow Jones climbed to over 21,000 as the President spoke on restarting the economy and pouring new money into military developments. But the question of will his cuts and spending increases keep the dollar from weakening still remains.
Do you subscribe to the following ideas?
- Free market economy
- Austrian economic philosophy
- Libertarian political philosophy
- Gold is the ultimate form of money
If you answered “yes” to all of these, then you may be the next SchiffGold Junior Broker. We’re currently looking for an outgoing, self-motivated individual to train as Junior Broker at our Manhattan office.
Investors will have much to mull over this week as Donald Trump gives his first address to Congress, and Federal Reserve Chair Janet Yellen speaks Friday. After that, the FOMC goes into their blackout period in anticipation of their March 14-15 policy meeting.
Tuesday night, Donald Trump will give his first State of the Union address to Congress, which is expected to touch on immigration, tax cuts, regulation, Obamacare, trade agreements, defense, and homeland security. Investors are hoping Trump will lay out more specifics on his tax plan and trade policy.
In his latest podcast, Peter Schiff looks at Donald Trump’s appearance at the CPAC last week where the new POTUS seemed to hit the campaign trail again, attacking the media, yet saying little about his tax reform or trade deficit policies. President Trump seems to have morphed into Candidate Trump, making promises while avoiding the necessary changes and economic sacrifices Americans will need to make.
This week, we saw predictions Trumponomics will indeed bring a spike of growth, but it will be a spike quickly destroyed by crippling interest rates. Could this be what’s causing the US Federal Chair Janet Yellen to suggest raising rates too fast would be “unwise”? As seats start opening up at the FOMC, Trump is in position to add key new members and start swaying the vote in his administration’s favor.