Inflation is not something we think about on a day-to-day basis, and this is because it happens at a very slow pace. As noted earlier, central banks and governments around the world target a specific inflation rate every year. This encourages people to spend or invest money and discourages regular savings. At an individual level, inflation will determine how much your savings will be worth after some years. At the same time, retirees are likely to spend their money on various health issues, and they will usually be charged more because of their age. This means you will have less money to spend at the end of the day.

To illustrate how much inflation can eat away at your retirement savings, you should consider the fact that in the USA, prices rose by about 20% between 2009 and 2020.

With this information in mind, you will have to ensure that your retirement savings are not just sitting in the bank and are instead generating extra money in an investment. Let’s look at how a Gold IRA can help to inflation-proof your retirement savings.

To make sure your retirement savings hold their value when you finally retire, you will need to use them to make an investment. One of the best options, in this case, is to place your funds in a gold IRA. This is simply a gold Investment Retirement Account, and it will literally hold your retirement funds in the form of gold. These investments may also turn part of your nest egg into other precious metals. Historically, gold has proven to be a great hedge against inflation as it typically appreciates at a higher price compared to the inflation rate. While this investment can be great for your retirement, you should note that it will concentrate your funds in a single asset class.

Before the modern monetary system was adopted in 1971, the US dollar was backed by gold, meaning anyone could exchange their currency for an equivalent amount in gold. Since all other world currencies were backed by the US dollar, they could also be exchanged for gold at any time. Although this system broke down, gold has still maintained very high value and is a go-to investment during times of economic uncertainty.

Here is a summary of the price of gold through the decades:

• In 1960, gold was trading at a price of about $35 an ounce.
• In 1970, it still had a price of $35 an ounce as this was fixed by governments around the world.
• In 1980, gold had shot up to a price of about $850 an ounce.
• In 1990, the price of the asset has adjusted back to about $360 an ounce.
• In 1999, major banks agreed to limit the sale of gold, and this brought the price down to about $279 an ounce.
• In 2010, the price of gold had gone up to about $1,113 an ounce.
• In 2020, gold was trading at a price of about $1,769 an ounce.

While the price may seem to be shifting from one decade to another, it is worth noting that experienced investors are able to determine the best times to purchase the asset. With a gold IRA, professionals will know the best prices at which to purchase gold, so you don’t need to worry about short-term price fluctuations. In the long run, the asset will be able to keep up with inflation.

Gold is traded in many countries and in many currencies, but in international markets, it is priced in the US dollar. Therefore, in international markets, one key factor that can determine the price of gold is the state of the US dollar. Whenever the USD is performing poorly, investors will move to gold as an investment as this is considered a good hedge against inflation. This further worsens the state of the USD since it lowers its demand in international markets.

For illustration, in 2020 during the Covid-19 pandemic, the USD performed poorly because of the lockdowns and movement restrictions. This lowered investor faith in the state of the USD, which meant that more people added gold to their portfolios. In this particular year, the price of gold shot up to $2067.15 on August 7th.

It is also important to remember that all central banks around the world hold gold in their reserves. Since not all countries are able to produce gold, some have to purchase the precious metal in international markets. This means they have to lower their holdings of the USD, and this ultimately drives down the value of the US dollar. At the same time, a weakening US dollar means that gold will be cheaper in international markets, and this encourages central banks to purchase more gold.

Another reason why you should invest in a gold IRA is that the asset has been used as a safe haven for centuries. Lots of currencies now have value only because the government mandates citizens and residents to accept the notes in exchange for goods and services. In countries like the USA, the currency is backed by the powerful military and faith in the state of the economy. Lots of people are fine with this situation and trust that the government will do everything it takes to maintain the value of the currency.

However, every now and then, political and economic turmoil threatens the stability of fiat currencies such as the USD. For example, pandemics, wars, and political coups can lead to the total collapse of a country. Throughout history, empires and nations have risen and fallen, and this always results in economic turmoil.

In such situations, the only people who are able to survive and thrive are those who held items that were deemed to be useful. For example, an individual who invested in gold could restart their life in a new and more stable country and economy. While fiat currencies are able to drop in value significantly, gold has historically been able to remain valuable.

Your retirement savings can also be used to purchase silver. In fact, this metal is commonly used to diversify investments as it has a range of applications. Like gold, silver is used to make expensive jewelry and is used as a store of wealth. However, unlike gold, it has a range of industrial uses. Manufacturers use silver to make batteries, electronic devices, medical devices, and industrial chemicals. The white metal is also used in the automotive industry. The price of silver usually spikes in times of economic and political turmoil, and this is because the precious metal works as a store of value.

These two precious metals are similar in many ways. They are both used as a store of value and are used to make jewelry. Investors purchase this precious metal as a way of diversifying their portfolios. Aside from these uses, palladium and platinum are used in the automotive industry, and more specifically, they are used in catalytic converters. The prices of these two metals are primarily determined by market forces. However, since they are also used as investments, their prices will also vary depending on the state of the economy and the political situation in the country.

When saving for retirement, it is essential to check the average savings for your particular age group. These statistics can help you gauge your performance. It is worth noting that the average retirement savings will also vary depending on the industry and the salaries. When evaluating your retirement savings, it is essential to also check the recommended amounts.

Retirement savings are meant to be held for the long-term, and this means they can be affected significantly by inflation. Depending on the state of the economy, inflation can erode a huge percentage from your retirement fund.

Because of this, you will find it much wiser to invest in a gold IRA. If you choose to invest in a gold IRA, your retirement fund will be used to purchase gold and other precious metals. The advantage of such investments is that they are able to consistently beat inflation. Precious metals also work as safe havens in case of economic or political turmoil, and during such crises, their prices can go up significantly.

Aside from gold, this fund will invest your savings in precious metals such as silver, platinum, and palladium. These metals have other functions aside from being investments, and this means their prices are a lot more stable.

If you are currently saving for retirement, you should check the recommended savings for your current age and income level. You don’t need to stress yourself as you try to meet your targets, but you should create a practical savings strategy. Take your time to learn the benefits of a gold IRA before you invest your retirement fund.