Gold: $1211.76 2018-08-10 13:08:02
Silver: $15.45 2018-08-10 13:08:02
Platinum: $838.52 2018-08-10 13:08:02
Palladium: $914.54 2018-08-10 13:08:02


The Financial Shark

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Inflation: The Financial Shark Circling Your Pension Fund

The Real Impact of Inflation On Your Retirement Savings

Inflation is one of the biggest problems Americans face today. But the real problem will be in years to come when you retire and realise your dollar-backed retirement portfolio is not worth the value you expected.


Do you know the real cost of inflation?

Consider this:

In the 1920’s, a $20 bill was the same value as a 1oz $20 gold piece. For that money, you could buy a brand new suit. Today, a 1oz $20 gold piece is worth $1300 and you can still buy a suit. However, the $20 bill is still worth $20 and with that, you would struggle to buy a decent tie to go with your suit.

Can you see how the dollar erodes over time?

Now let’s how you some actual figures over the last 50 years:

  • In 1978, $20,000 had the same purchasing power as $79,395
  • In 1988, $20,000 had the same purchasing power as $42,725
  • In 1998, $20,000 had the same purchasing power as $30,567
  • In 2008, $20,000 had the same purchasing power as $23,474

If we use the average inflation rate, in 2028, $20,000 is expected to have the same purchasing power as around $16,406.97.

Are you prepared to risk losing $4500 a decade?

How inflation stunts your economic growth?


The common view is that inflation is used to simply measure the health of the economy. When there is a rise in living costs, consumer goods and services, the economy looks healthy because it appears people are confident about spending. What many people don’t realise is how much inflation erodes the value of your money over time.

Here’s a quick example of how inflation might work for the average American:

The average rate of inflation in the US is between 2.1 and 2.5 percent a year. For the purpose of this example, we are going to round that down to 2 percent to keep the math simple. Let’s say you have $1000 in cash stored in a tin and tucked away in a safe place. In a year’s time, how much will your $1000 be worth at the current rate of inflation? 

If inflation grows at a rate of 2.5%, your $1000 loses $25 a year. Over 10 years, it loses $250. An alternative solution is to invest in a bank product and earn interest on your money. However, the average bank deposit rate is a measly 0.01%, or if you are keeping your money in a savings account it is 0.06% APY.

In the current economic climate, investors are not beating inflation. The stone-cold truth is that paper-based investments are not working for you!

What’s worse is that inflation will continue to rise whilst interest rates are lowered. The cost of living is going up, but the average American salary is not keeping up! And savings are consistently losing value.

How to beat inflation

Now you see how much the value of the dollar deteriorates over a ten year period due to inflation, let’s examine a solution that consistently beats inflation.


If we use the same years as the example above, you can see how the cost of gold over the same period has risen significantly in contrast to the massive erosion of the dollar.

  • In 1978, gold was $208.10 an ounce
  • In 1988, gold was $410.15 an ounce
  • In 1998, gold was $288.70 an ounce
  • In 2008, gold was $869.75 an ounce
  • In 2018, gold is priced at $1300 an ounce


It’s not possible to accurately predict the cost of gold in 2028 of course, but if we were to speculate on the current growth in the last ten years, there is a strong possibility the value of gold will increase. And with inflation on the rise together with a weak US dollar and a flailing economy, the value of gold is almost certainly heading in an upward trajectory.

It’s clear to see the value of the dollar has dwindled in terms of purchasing power, whereas Gold not only protects your savings against inflation, it increases your purchasing power as well. That is why gold will always be the King of inflation protection.



Capital Gold Group is a leader in the precious metals market and provide peace of mind to investors looking to protect their future purchasing power. Our team of experienced specialists focus on navigating unstable economies and help our clients avoid losing money you are saving for retirement. To diversify your investment portfolio and protect your savings against inflation, consider investing in a Gold IRA.

Call us now for advice on building your precious metals portfolio.

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The Definitive Gold Guide

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