In 2022, the value of the dollar has depreciated considerably. Gold, compared to the dollar, does not experience the same fluctuation in value. One hundred years ago, six cents had the same buying power as one dollar today. The rate of inflation today is at its highest since 1981.
Consumers are facing the repercussions of this high inflation rate. In the twelve months before July 2022, the food index increased by 10.9 percent, the energy index increased by 32.9 percent, and the index on all other items increased by 5.9 percent. Experts anticipate these rates to increase.
Globally, the dollar is depreciating faster than other currencies. For instance, in 2021, the dollar depreciated 16 percent compared to the Mexican peso and Australian dollar, 12 percent compared to the Canadian dollar, and 9 percent compared to the Euro, British pound, and Chinese yuan. All in all, the dollar has lost 99 percent of its value against the value of gold since 1933.
Comparing consumer prices from the 1920s to the projected costs in 2030 exemplifies this high inflation and its potential impact. The price of a gallon of milk in 1920, $0.65, is expected to experience an 825 percent increase with the 2030 projected price, $6.38. From $300 in 1920 to $77,100 in 2030, the cost of yearly college tuition will rise by 25,602 percent over 110 years.
Likewise, buying a new car will experience a 23,815 percent increase in price from the 1920 price of $250 to the 2030 price of $62,179. Meanwhile, the value of gold will undergo a 42,956 percent increase over the same period.
The economic trends of the last hundred years suggest the dollar in 2020 will be worth $0.65 in 2030. So, why does gold maintain its value more than paper money? As an investment, gold poses zero percent counterparty risk, is tangible in ownership, surges in value even during a recession, creates more yield than a traditional savings account, and becomes more in demand during economic hardships.
