George Soros Warns of Deflation: How Can Gold Protect Investors?

In January 2016, many stock exchanges started the year off declining dramatically. Would the entire year be bad? Billionaire George Soros blamed the stock declines on China causing deflation. Wise investors purchase gold to protect against deflation.

“Deflation is Banker Nightmare”

The ideal central bank strategy would curtail both inflation and deflation. Some deem inflation to be a rather natural occurrence due to rising productivity and living standards. Deflation, on the other hand, is a more grave concern.

The Federal Reserve (Fed) was established in December 23, 1913 with the expressed goals of controlling inflation and unemployment. Behind-the-scenes, the Fed central bank also tried to prevent deflation. The problem with deflation is that it can destroy an entire economy.

With deflation, asset prices begin to fall due to unemployment and scarce capital. The Great Depression was a primary example of deflation. Without income, consumers no longer purchase goods and services. Businesses must cut production and fire employees, which makes the vicious cycle even worse.

“George Soros Blames China for Deflation”

From 1918 to 2015, the United States clearly led the global economy. But when George Soros blamed China for global deflation at Davos, Switzerland, he may have been acknowledging a changing of the guard. Now, Chinese productivity is the primary focus of the global elite.

“How Gold Protects Investors Against Deflation”

US Money Reserve President Philip Diehl was a former Director of the United States Mint; thus, he understands all facets of money. President Philip Diehl shared his views on the economy during his US Money Reserve Podcast with Eric Dye. He acknowledged that the United States paper dollar value was rising; but, like all good things, it would eventually fall.

With Soros blaming China for deflation, the global economic landscape may have already changed. Some experts believe the dollar rise is a dead cat bounce. Investors see the dollar as one of the safest Western investments due to nostalgia.

In the East, gold offers safe harbor. US Money Reserve President Philip Diehl noted that Chinese and Indian demand for gold could make his government-issued coins more popular. US Money Reserve coins have a guaranteed weight and purity.

As China gains more power, it is replacing dollars with gold. Gold protects against deflation because it remains a viable form of money while other paper assets are collapsing. Deflation may have arrived, gold coins can help you weather the storm.

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