Gold & Inflation

LESSON #2: Gold & Inflation

Gold responds to month-to-month inflation data but on average it does not change much with inflation. You do not buy Gold and use Gold because your local currency is down by 10%.

The primary reason, there is a huge gap/spread between buying and selling spot gold. Spread is around 30-40% . You will always pay 10-15% more from the market price for spot gold and brokers will pay you 15-20% less and when you sell Gold you + you need pay taxes and even capital gain taxes. So using Gold is not practical in any regular trouble time.

However, if there is a risk of collapse of the economy where people can lose 100% value, such as in Iran or Turkey, people use Gold as currency as everybody recognizes Gold's store of value. Gold is only good when there is a total collapse. Gold will be volatile and will have upside pressure in a bad economy for sure but the inflation rate usually doesn't matter that much.

Gold is also highly undervalued by manipulation. We never got out from the Gold standard in the real world but on papers. Countries still see how their economy is priced in comparison with Gold prices. So how do you add more currency to the system without drawing any attention and claim your economy is doing well? The answer is simple, you add shi* tons of currency to the system and control Gold price, everybody will think your economy is doing great. But when the tide is gone you will see who is naked!

Gold cannot save you from inflation, it will help you when there is a collapse but your Gov. will definitely take it away from you, they’ve always done that throughout history. Even the US took all the gold owned by the public and made it illegal to own gold when they messed up last time.