Inflation is only the illusion of rising prices, in fact the prices are not rising, it is the value of the almighty dollar decreasing.
By Timm Winslow
Intellihub.com
August 25, 2013
You are at the gas pump, you notice the price is thirty cents higher than the day before, over two dollars higher than it was ten years ago or so.
You top off the tank and head in to get a high-fructose corn syrup enriched frosty beverage, seventy-five cents for a twelve ounce can. You can remember when the same can cost you fifty cents.You also decide to grab a pack of smokes, that will take about six dollars out of your wallet today.
I feel like an old man telling “back in my day…” stories, but there is a term for these rising prices, it’s called inflation. Inflation is only the illusion of rising prices, in fact the prices are not rising, it is the value of the almighty dollar decreasing.
Everyday that you save a dollar bill it loses value, what was a buck today is a buck thirty tomorrow, sometimes quite literally in the case of ever rising gas prices.
Lets do an example, lets pretend it is 1990, you have $1,000 dollars, you can buy 862 gallons of gas at $1.19 per gallon , or 2,000 cans of soda at 50 cents per can, or you could buy 813 packs of cigarettes at $1.23 per pack.
Now lets pretend you stuck that $1000 dollars in a drawer, and let it sit until today. You could buy 285 gallons of gas at $3.50 per gallon, 1,333 cans of soda at 75 cents per can, and 166 packs of cigarettes at $6.00 per pack.
You lost 577 gallons of gas, 667 cans of soda, and 647 packs of cigarettes. You actually lost wealth and financial stability by doing what everyone has told you to do all of your life, saving money.
Even if you stuck that $1,000 in a savings account, the national average for interest rates on bank accounts is only .21%. After 23 years you would only gain $49.43. That will get you an extra tank of gas, but doesn’t do much to protect your wealth against inflation.
The best way to protect the extra cash you have is to invest it into something that is proven to hold its value over the years. My favorite is precious metals, silver, gold , palladium and even copper have proven themselves historically to retain ,and even gain value over the years. Silver is my favorite of these metals for many reasons.
Silver is a very interesting metal. It has been called the poor mans gold, because it is much cheaper than it’s yellow counterpart, however, like gold it has retained and even increased its value throughout history.
Up until 1964 all US dimes, quarters , half dollars, and dollar coins were minted in 90% silver. It’s been a favorite next to gold for jewelry since the beginning of civilization, and it also has a special trait that gold does not have, it is the highest conductor of electricity on the periodic chart of elements, which makes it an ideal metal for use in computers and circuitry.
It is this industrial aspect of the metal that make some people believe that silver could one day surpass gold in value. The reason for this is that silver is consumed. Every circuit board has some amount of silver in it. Every time someone upgrades their computer, tablet or cell phone, and throws away their old one, they are also throwing away some of the worlds silver supply.
Another reason I prefer silver over other metals is that it is cheaper, you can get an ounce currently for about $25, as opposed to an ounce of gold for $1400. This makes it much easier to acquire while on a budget, and also easier to sell off small quantities if you need some cash to make a purchase.
You can start buying silver for about $2.00. Just put in what you can afford and slowly add to your position.
On that note, let’s go back to our hypothetical $1000, it is 1990 again, and you decide to buy silver with that $1000.
The average price per ounce is $4.50, you buy 222 ounces. Skip to the current price, silver is actually in a slump now, and sitting at $24 dollars per ounce, but even in a slump your wealth is still protected. You sell of your 222 ounces that you bought for $1000 in 1990 and you now have $5,328.
So lets compare that increase to the inflated prices of gas, soda and cigarettes.
Gasoline
1990: 862 gallons
2013 without silver: 577 gallons
2013 with silver: 1522
That’s over 1200 more than what you could of bought had you saved cash, and you gained 660 more gallons than you could of bought in 1990.
Lets look at that can of soda.
1990: 2000 cans
2013 without silver: 1333 cans
2013 with silver: 7,104
That is over 5,000 more cans than you could of bought in 1990 or 2013 without your silver purchase.
Now for your smokes
1990: 813 packs
2013 without silver: 166 packs
2013 with silver: 888 packs
Cigarette prices have went through the roof due to the multitude of taxes put on them, but with silver you still protected your wealth.
To see the silver historical charts for yourself follow this link:
http://www.kitco.com/charts/historicalsilver.html
In my next article I will dive into silver in its many forms,what I like to buy and what I avoid.
Writer Bio:
Timm Winslow is an artist and folk musician from the Baltimore area who researches a wide variety of subjects and has years of experience in silver investment.
Source Article from http://intellihub.com/2013/08/25/effect-inflation-silver-dollars-quick-breakdown/
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