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Rekindle the Savings Ethic With Gold Coins

Buying gold coins is a little different from opening a savings account. The idea is not so much to make a profit as it is to preserve wealth for future use. When money is withdrawn from a savings account the accumulated interest, at a minimum, should compensate for the loss of purchasing power of the initial deposit.

A few generations back it was common practice for people to save until they had sufficient cash to buy the things they wanted. As a result Americans enjoyed the greatest expansion of domestic wealth in history. But we grew complacent and lost sight of the ethic that had created our prosperity.

With much of the world in ruins following WWII, there was no alternative to amassing debt if it were to arise from the ashes. Reconstruction was swift and successful, and within a generation mature economies were flourishing once again. But we had become entrapped by the insidious lure of debt-driven expansion.

For a half century the people let debt run rampant while their governments did the same. The warning klaxons went unheard because paychecks were growing faster than accumulating debt. Saving became a relic of an impoverished past we were all too anxious to forget.

Credit, however, erodes wealth. Our dollars, which had once grown by interest earned, were now being depleted by interest paid. A very sizable proportion of our dollars that once contributed directly to growing our wealth was now diverted to non-productive sectors.

In the 1980s it all started to unravel. Pressured to keep inflation in check, the Fed introduced new methodology to track its growth. The Core CPI was created to provide a more stable and consistent measure of inflation by eliminating the most volatile and unpredictable elements, such as fuel and food. At the same time, however, it also lowered the benchmark for setting interest rates.

As a result, real inflation – the true rise in the cost of living – began to outpace the core CPI while interest rates fell. Soon money saved came to mean money lost. With no place left to turn, Americans vested their future in Wall Street.

Those investments started to pay off and people lost all interest in saving, which for generations had prepared them for the proverbial rainy day. The rain finally came, and it has been lingering ever since. With each reversal in fortunes the clamor for safe haven grows louder.

That haven has always been here, in gold coins. Gold coin investments are not substitutes for well balanced portfolios, they are an integral part of them – the essential element of the savings ethic.

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