Since its disconnect from gold in 1971, the U.S. dollar’s purchasing power has gone nearly straight down.
That’s created an uphill environment for savers. By the time you can save a buck — after your taxes and expenses — the dilution of the dollar continues to work against those savings.
That’s true of the simplest form of savings of all: Cash in a bank account.
Even with relatively higher yields on cash today, money in the bank continues to lose value over time. (Source: X/Twitter)
Century-to-date, keeping cash in the bank has been a losing proposition.
The trend was the worst in the 2010s. Although inflation was moderate during that decade, and the Fed was arguably fighting deflation following the Great Financial Crisis, banks largely paid no interest to depositors.
That’s improved since the Fed aggressively raised interest rates in 2022-2023. Investors are almost getting a positive return after inflation.
But with rates coming down, potentially aggressively under a new Fed Chair next year, that trend will worsen.
Add it up, and it’s another reason why gold is a superior form of savings. Cash is more like an ice cube on a summer day – over time, its value will melt away.
~ Andrew
P.S. Remember, the Fed is expected to cut rates in September, with or without a new Fed Chairman.
Such a move risks kicking off a “most terrifying bull market” in stocks, which sends those valuations into the stratosphere before they come crashing down to earth. And it could help gold push higher.
But either way, it’s likely to push the dollar lower — and further punish savers.
Meanwhile, Grey Swan Live! returns tomorrow. We’ll be joined by Matt Clark, Chief Research Analyst at Money & Markets, one of our corporate affiliates.
Matt’s role is similar to mine as Portfolio Director — finding new investment opportunities and sifting through ever-shifting markets.
Matt is the only person I know who can find data and precise numbers faster than I can. Maybe that comes from his days as an investigative journalist.
But with markets hitting an air pocket this week and all eyes on Jackson Hole, this will be a timely and critical chat — exclusively for our paid-up Fraternity members.
If you have any questions for us about the market, send them our way now to: Addison@GreySwanFraternity.com
