What is Investing in gold in terms of inflation and financing. Most stock indexes around the world have recovered in whole or in part, with some recently setting new records. The reasons for coming to us are forecasts of GDP growth across countries, including vaccines; Immediate recovery; Trade relations between the two countries are expected to improve. But is it a good time to stop investing and invest in gold in the past?
One of the most popular foundations for me is gold, which is a good source of protection against inflation . Despite the limitations, many investors and managers have explained the theory of future inflation and the rise in gold. He lost more than 10% from the top, but some continued to defend him. Are they wrong or is it something that took longer to reach? Either way, keeping your hands open is not a bad idea , and some of us have all seen investors move towards gold by investors we all know, and never to invest.
Investing in gold, which is comparable to gold
Many people have heard that gold is associated with inflation. Some people blame their behavior on the market. There are those who defend those who oppose the value of the gold dollar price index. In short, it’s completely different, but the truth is, not everyone I hear is right or wrong at the same time.
The only conclusion I can personally pick up is that all of the events described at the same time meet . Therefore, uncertainty, In times of crisis and inflation, gold is often seen to change its price. Investors Organizations and banks will be interested in this metal. To do this you will find key factors that can influence your price.
Gold and inflation
Before setting the gold standard, I wanted to prioritize inflation in the United States. As we can see, we have some relevant aspects. The next number is to keep you in mind.
- Deflation. Yellow box. Decades of the 20s and 30s. In the meantime, we can see how inflation occurs.
- More than 10%. Great inflation. Green boxes. We have period 3. Highlights from the beginning and end of the year with the highest peaks.
- Less than 5% of inflation. There are three valleys. The first is the first point of deflation.
What happens when gold is adjusted for inflation?
Inflation often causes the price of all assets to rise in the long run. Gold is no exception. For this reason, the chart above is adjusted for inflation . That is, what is the value of Shwe Aung in the past in terms of the value of the dollar today? Now if we look at the ordinary gold chart (if not touched so as not to be too dirty) it will see a huge revaluation. We are talking about that. The most important points are assessed.
- Inflation period . Prior to the bankruptcy of the system agreed upon at Bretton Woods, gold depreciated when it became inflated. However , due to the volatile economy, inflation has been linked to the rise in the value of gold. It should also be noted that the Bretton Woods system collapsed by printing large sums of money to finance the Vietnam War. The United States has cut its gold reserves after France and Great Britain demanded that their dollar balances be turned into gold. Everything is different from situation to situation.
- deflationary period. During this time gold gained value. However, the aftermath of the financial crisis caused by the collapse of the Lehman Brothers was compounded by the rise in inflation and the rise in the value of gold. However, the reason for the increase was motivated by the economic crisis and a lack of trust in the banking system rather than inflation itself.
- Medium inflation period. After the dot-com bubble burst, gold performed well; But in recent years it has not done well. This reason may motivate you to look for a safe place to search for gold.
Gold ends with inflation
If the price of gold is a percentage point higher than inflation, it may be worthwhile to invest in it (this is “squeezing”). In the long run, as a port, there is only one real investor’s expectation. Therefore, investing in gold during a time of change is a good choice. If you’re going to invest in these things before you’re going to make these changes, the rewards are huge.
In conclusion, despite high inflation, gold can be a good refuge. And the current state of the global economy makes it even more interesting. Although we do not currently face high inflation, we do anticipate the final outcome of the current crisis. We are facing an unbearable economic situation.
What role does Arin Aung Shwe play in financial development?
Financial support in the macro-economy All available funds to purchase services or savings bonds. Money is transferred to the public by depositing money into banks (invoices and coins) and bank accounts. The sum of the two is monetary (later). A financial base multiplied by a financial multiplier is a lot of money.
In the first graph you will see how much money was raised. 2020 $ 15.3 trillion in January; It has now grown to $ 19.1 trillion. In dollar terms, Mass will grow to $ 3.8 trillion by 2020. That is 24.83% (inflation and financing).
Monetary policy is said to be related to the amount of money circulating and prices in the economy, depending on inflation. Keynesian theory, on the other hand, states that there is no correlation between inflation and financing, especially as the economy grows. So if you are trying to find something else, let’s look at the relationship with your finances.
Gold ratio with financial base (inflation and financing)
As you can see, the financial base has been significantly increased. Mainly as a result of “helicopter money” policies.
When you see this graph, you know that it is difficult to continue doing this for a long time without change. Or more. They have seen strange things. For this reason, it is still not possible to find a correlation with the financial situation without the rise in prices and much of the link between gold and inflation. (Remember, according to Keynes, we can not find the link between inflation and the financial situation, inflation and financing)
The following table will show more clearly. This shows us the ratio between gold and silver bases.
Many points can be highlighted.
- As you can see, the printing of large amounts of money was significantly reduced between 1960 and 1970 (significantly, as discussed earlier, because of the Vietnam War).
- Inflation pushed gold prices lower in the following years , driven by uncertainty, which pushed prices higher, reaching a very considerable high for the ratio. (To get the ratio as you arrive, multiply the current gold price by x10 and above.)
- Unprecedented decline in financial fundamentals after the onset of the financial crisis .
- At the moment, the higher the gold ratio, the higher the monetary situation. The higher the profit. In the same way, The more you invest in gold, the lower the return on investment.
Silver and Gold Conclusion
Only if gold is recalculated from the current level to match the current level. That route will be over 100%. : If the ratio is due to fear of inflation; If it is 1 due to moments of uncertainty and severe crisis, we will find it before the gold price depreciates. Because its price has recently peaked. But because of the financial situation.
Is it a good opportunity to invest in gold?
There is no single measure of time to determine the exact time for gold. But how do we find out about inflation? The whole situation for. In addition, business is a behavior and a good investor should ask himself where we are. This is most likely to happen.