Typically inflation and higher prices are considered bad, but occasionally they may be good for the economy... Inflation is one of the oldest concepts in economic theory, but experts still struggle to decipher its actual role in the market. It is often seen as a financial plague, which can ruin entire nations if it gets out of control. Price inflation means that prices have increased in the economy, usually due to monetary inflation, i.e., an increase in the money supply. Some of the most inglorious examples of hyperinflation are Germany in 1923, Greece in 1944, Hungary in 1946, Zimbabwe in 2008, and surprisingly the U.S. Confederacy during the Civil War. But proponents of inflation … [Read more...]
How Does Inflation Affect Foreign Exchange Rates
Inflation affects every consumer, business person and investor in some way or other. Inflation is one of the key factors that affect consumer prices, financial markets including Stocks, Bonds and Forex. As such, it is important for consumers, investors and traders to get a deeper understanding of what is inflation and what causes it. What is Inflation? Understanding inflation is often complicated by the fact that the cause and the effect are often muddled together in people's minds due to the lazy way we often refer to inflation. The effect of inflation is what people see when they go shopping and see increases in the general price of goods and services. When the individual prices of just … [Read more...]
Why $5,000 Gold May Be Too Low
Jeff Clark, BIG GOLD You already know the basic reasons for owning gold – currency protection, inflation hedge, store of value, calamity insurance – many of which are becoming clichés even in mainstream articles. Throw in the supply and demand imbalance, and you’ve got the basic arguments for why one should hold gold for the foreseeable future. All of these factors remain very bullish, in spite of gold’s 450% rise over the past 10 years. No, it’s not too late to buy, especially if you don’t own a meaningful amount; and yes, I’m convinced the price is headed much higher, regardless of the corrections we’ll inevitably see. Each of the aforementioned catalysts will force gold’s price … [Read more...]
