As dollar weakens due to inflation, demand for bitcoin, gold increases

Currency stamp from hyper-inflation GermanyHebi B./Pixabay

Investors execute tried-and-true strategies, new ones to hedge their savings against record-breaking inflation

As inflation reaches a high not seen in over 30 years, consumers are looking for ways to hedge their savings against a weakening dollar.

The Consumer Price Index has risen to 6.2% over the last twelve months, indicating the Federal Reserve’s previous assumption that inflation would be “transitory” is erroneous.

The inflation consumers are currently experiencing is due to several economic factors that historically present themselves when government manipulates the money supply. 40% of currently circulating U.S. dollars were printed in 2020. And with the trillion-dollar infrastructure deal recently signed, The Fed shows no signs of slowing down their money printers.

Flooding the market with fresh cash not backed by real production means taxpayers will ultimately foot the bill. This shows itself through the hidden tax of inflation, among other things including higher taxes, higher production costs, and higher consumer prices.

With overall inflation now at 6.2%, consumers are facing the reality that unless they got a significant raise this year, they took a pay cut.

As consumers try to hedge their savings against inflation, they are turning to different strategies to get the job done.

Gold, an asset consumers and investors historically look to in times of nation-wide economic uncertainty, is expected to be bullish in 2022 due to a number of factors. As the global gold market opens back up post-pandemic, demand is expected to increase significantly. Gold jewelry, the most popular form of gold for consumers, is expected to experience a rise in demand due to the upcoming holiday seasons in America, India, and China.

Goldbugs, a term of endearment used for economists like Peter Schiff who tout the investment as the best way to protect savings from inflation, view its non-fiat properties as uniquely important.

While Federal Reserve Notes, or paper money, have no real value (its last ties to the gold standard were severed in the 1970s), gold has weight to it. It’s historically consistent value, along with its ability to be used as both a good and a medium of exchange, make it a versatile, safe long-term investment.

Ahead of its bullish run predicted for 2022, the value of gold sits at around $1867 per ounce.

Though Bitcoin has only been around since 2009, its decentralized nature and gains over the last decade have made it a key player in hedging against inflation. While gold is still a popular investment strategy, analysts are seeing a current trend in favoring bitcoin investments versus gold.

Viewed by many as Digital Gold, one Bitcoin is currently worth around $60,600 and its value has increased about 300% since the 2nd quarter of 2020.

As consumer demand increases for decentralized currency, the worth of bitcoin’s secure and anonymous technology becomes more valuable.

Its social proof continues to increase as well as athletes take portions of their contracts in cryptocurrency, and countries like Venezuela who are experiencing rampant hyper-inflation accept bitcoin as payment instead of the State-sanctioned Bolivar.

Statistics show a quarter of investors’ money is going towards cryptocurrency as opposed to more traditional assets.

As financial analysts predict inflation problems will persist well into 2022, overall inflowing capital to the cryptocurrency market shows no signs of slowing down. Goldbugs continue to invest in their historically safe asset. A weakening dollar continues to hurt the pocketbooks of everyday Americans. The upcoming Thanksgiving holiday is expected to be the most expensive to date due to surging food prices. Gold and bitcoin are two popular assets viewed by consumers as stabilizing forces amidst an increasingly volatile economy.