Savers are Losers!
Guest post by Chris Slife, President of Howling Coyote Silver Company
This article is a rebuttal to, Buying gold — is it better than saving?
Savers are Losers!
For most of us, saving usually means setting money aside each month into a savings account. The assumption has been that this is the ‘safest’ way to save. I want to challenge this assumption and encourage people to look at other ways to save.
Fundamentally, I agree with the need to consume less, spend less and set aside for the future; however, whatever savings vehicle you choose, it MUST be able to hold its value over time, i.e. retain its purchasing power. For those that choose to adhere to the traditional wisdom of holding all of your savings in the dollar, i.e. savings accounts, money markets, or certificates of deposit, there is a very real risk of their purchasing power diminishing over time. In other words, because of the loss of purchasing power, you will become a loser – of purchasing power that is.
Chart #1 is a 20 year chart of the dollar:
Chart #2 is a longer term chart beginning with the creation of the Fed back in 1913:
If the majority of one’s savings had been kept in dollars over this time period, they have become a loser – a loser of purchasing power. This loss in purchasing power is accelerating. As you can see from Chart #3, we are creating dollars at a faster and faster rate.
The more dollars that are created, the less valuable every dollar already in existence becomes. Should this acceleration continue, or move into a hyperinflationary type event, traditional savers will be harmed even more. It is crucial that you choose at least one savings vehicle that accounts for purchasing power.
Below, I will share with you how I save. (And by the way, saving is NOT investing. Saving is preservation of purchasing power not trying to increase it.)
1) Emergency cash on hand in case you can’t get to a bank or banks close in an emergency
2) Have a savings account that has enough in it to cover up to a three month’s worth of expenses
1) Gold and silver bullion
3) Means of protection
4) Other common tangibles that would not be available during a hyperinflationary event
To sum up, I think it is very important for everyone to save for the future. The important caveat to remember, however, is that one of your saving vehicles must retain its purchasing power.
DISCLAIMER: I am not a paid financial consultant. I do not share in your GAINS or LOSSES so invest in your own financial education and study, study, study. Do not take my word for anything. Simply use it as a springboard to further educate yourself.
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