Watch Freddy Lim, StashAway Co-founder and Chief Investment Officer, and Philipp Muedder, Head of Financial Planning, discuss the latest global events and their potential impact on the markets and on our investment portfolios.

EDIT: At [2:16] the inflation percentage increase was incorrectly announced as 1.2%. The correct figure is 1.6%, of which 0.7% comes from the base effect. Therefore the inflation increase is 0.9% instead of 0.5%. The subtitles in the video reflects the correct numbers.

In this episode:

1. StashAway Market Commentary 19 May 2021
2. We explain what’s behind recent inflation in the US [0:12]
3. Why is there so much Gold in my portfolio?[4:32]
4. Is the GLD ETF physically-backed? [6:21]

In Your Best Interest feat Financial Samurai

In Your Best Interest: How to invest with Gold

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LEARN ABOUT: Investing During Inflation

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

The US inflation rate is a topic that impacts everyone’s financial decisions. Understanding inflation and its effects on various asset classes can help individuals make informed investment choices. One such popular investment option during times of inflation is gold. Including gold in your portfolio can act as a hedge against inflation and provide stability during uncertain economic periods.

The inflation rate represents the percentage increase in the general price level of goods and services over a specific period of time. It is measured by tracking the consumer price index (CPI), which calculates the average price change of a basket of goods and services commonly purchased by households. When the inflation rate is high, it erodes the purchasing power of money, as prices rise at a faster pace than income growth.

In recent years, the US inflation rate has been relatively low, hovering around 2% annually. However, it is essential to note that even moderate inflation can gradually erode the value of money over time. As a result, investors often seek asset classes that can preserve their purchasing power and offer a store of value during inflationary periods.

Gold has traditionally been considered a safe haven investment during times of economic turmoil, including inflation. Gold’s unique characteristics contribute to its appeal as an inflation hedge. Firstly, unlike paper currencies, gold is a tangible asset that cannot be created or replicated at will. As a result, it holds intrinsic value and has been used as a medium of exchange for centuries. Its scarcity acts as a protection against inflation, as increased money supply does not impact its value significantly.

Secondly, gold has a historical track record of maintaining its value during inflationary periods. When the general price level rises, the value of gold typically increases as well. Investors view gold as a reliable asset that can provide stability in their portfolios during uncertain economic times.

Including gold in your portfolio presents diversification benefits, reducing portfolio volatility. It is because gold often has a low correlation to other assets such as stocks and bonds. During periods of inflation, traditional assets may underperform, while gold can serve as a counterbalance due to its ability to retain value during such times.

Additionally, holding gold can serve as a hedge against inflation expectations. While inflation might be low at the moment, if there are indications that it will increase in the future, investors may choose to allocate a portion of their portfolio to gold. By doing so, they can protect their wealth from the potential erosion caused by rising prices.

However, it is essential to note that including gold in a portfolio has its own risks. The price of gold can be volatile, and investors need to carefully assess their risk tolerance and investment objectives before investing in this precious metal. Diversification across multiple asset classes is always recommended to mitigate the risk associated with any single investment.

In conclusion, the US inflation rate is an important economic indicator that affects everyone’s financial well-being. When inflation is a concern, gold can play a significant role in protecting and preserving wealth. Its characteristics as a tangible, finite asset have made it a go-to investment option during times of inflation. However, investors must carefully evaluate the risks and diversify their portfolios accordingly. Including gold as a part of a well-balanced investment strategy can be a prudent step to safeguard against inflation and ensure financial security.