Is Inflation transitory? What happened to Your Purchasing Power?

50 Years Ago, on 15 August 1971, in an address to the nation, the then US President, Richard Nixon, announces the devaluation of the dollar (which marked the beginning of the end for the Bretton Woods system) and speaks in detail about the measures taken to increase prosperity in the United States.

So, what happened 50 years later today? Is your dollar today still worth just as much as 50 years ago?

The Bretton Woods Agreement of 1944 fixed the conversion rate for one Troy ounce of gold at $35. Today, one Troy ounce of gold is around $1800.

Here is the research data we did and to provide you an easy comparison. By overlaying the inflation-adjusted amount in the dollar, you can observe what happened to your dollars in terms of actual purchasing in Cash vs. Gold vs. Silver vs. Housing vs. Dividend Reinvested S&P500.

And the estimated actual buying power for each asset class today:

  • Cash = $15
  • Gold = $634
  • Silver = $321
  • Housing = $222
  • Stock = $1627

If you keep $100 cash in a safebox in 1971 and takes it out to spend in August 2021. The actual buying power of this $100 bill is only worth $15 of goods and services back when in 1971.

But if you invested the same amount of dollar into other asset classes, your buying power would have multiply!

Given that cash generally loses its value over time, therefore, investing with your money today is far better than saving your money. Hence, it is essential to broaden your investment network!

Good Luck and Best Wishes.

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