Inflation is a phenomenon that economists observe in a country’s economy and is related to the disorderly increase in the prices of most goods and services that are traded in its markets over a long period of time. In this article you will find a clear example to answer your question of how does gold work against inflation?..
The last breath of a country to rescue its economy.
Zimbabwe will introduce gold coins as a “store of value”
Inflation is having a strong global impact. The high prices of food or fuel are causing some nations to take extreme measures to control this complex economic context.
In this line, Zimbabwe aims to be one of these countries, by announcing that it will begin issuing gold coins as a monetary and control solution against inflation, as announced this week by the central bank of the African country.
Zimbabwe is a country of less than 15 million inhabitants that is located in southern Africa. It has a dual currency system: US dollars and Zimbabwean dollars. The latter is the one that most of the inhabitants receive in their salaries and its value does not stop falling.
Store of value
To deal with this situation, the gold coins will be introduced as a “store of value”, according to a statement from the governor of the African country’s central bank, John Mangudya. This way, Zimbabweans will be able to exchange them in the future without worrying that the currencies will deteriorate in value, as has happened with the Zimbabwean dollar, which has devalued more than 40% since the beginning of the year.
Fortune reports that the public will have access to them starting from July 25, and they will sell the items based on the current international gold price and the cost of production.” The public will be able to purchase gold coins using both Zimbabwean dollars and US dollars and other foreign currencies.
Buyers will be able to keep the coins or put them in the custody of a bank, Fortune account. They will also be able to exchange the coins for cash at any time, although Mangudya’s statement says that the coin “can also be used for transactional purposes.”
The introduction of the gold coin comes as Zimbabwe’s central bank tries to control rising inflation in the country, where the annual rate hit 192% last month.
Gold against inflation and war
Since the 1970s, investors have consistently favored gold as one of the “most popular” commodities when it comes to hedging against inflation and war. This enduring preference has solidified gold’s status as a reliable and sought-after asset for safeguarding investments during uncertain times.This preference stems from the fact that the metal’s value tends to rise as the purchasing power of currencies declines. Fortune.
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Amidst times of market uncertainty and in the face of rising inflation, investors tend to “turn” to gold.This significant trend was notably evident last February, just before the Russian invasion of Ukraine, when “skinny” investors played a pivotal role in driving the value of the precious metal to a record high within a mere two years, as extensively explained by the medium. Furthermore, the surge in gold’s value during this period underscored its status as a prominent safe-haven asset amidst geopolitical uncertainties and market fluctuations.
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CONCERNED ABOUT INFLATION?
Discover the power of gold as a reliable shield to safeguard your wealth from the erosion of money’s value.
learn how to protect your wealth from inflation with gold. It implies that by acquiring knowledge about investing in gold, individuals can take steps to safeguard their assets and potentially mitigate the negative impacts of inflation on their wealth.
At Prudential Metals Group we can help you protect your portfolio against inflation with gold. Our experts understand how to maximize the benefits of this precious metal’s stability and growth potential for long-term success.
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