Repost from 8-2-2021
“Interestingly, both of those regimes, along with today’s, share one thing in common: negative real interest rates. The 1940s was the most financially repressive environment yet in that respect. The Fed at least allowed interest rates to rise in the 1970s while inflation rose faster. From a market perspective, there was one important lesson from both periods: At times when investable assets yield less than inflation, owning tangible assets becomes imperative. Commodities were far-and-away the best performing asset class in both of those decades.”
USAGOLD note: In the 1940s, gold and silver were the money so there wasn’t any need to hedge the inflation by purchasing precious metals privately. The 1970s were a different story. Prices went vertical. Smith and Costa do a deep dive into both the 1940s and 1970s – the two eras analysts most frequently cite as eras comparable to our own. They warn that today’s environment is “far more extreme” than those two eras.