Inflation's Impact on Military Families: The Case for Precious Metals

The impact of inflation on military families' purchasing power cannot be overstated. After 16 years in the Army, one thing is clear: assumptions deserve to be challenged when it comes to personal finance.

A family's money can erode over time due to inflation, but physical gold and silver can serve as a hedge against this loss of purchasing power. These precious metals were once integral to America's monetary structure, with the Constitution stating that only gold and silver coin could be used as tender in payment of debts.

However, the Coinage Act of 1792 marked the beginning of the end for the bimetallic standard, which was dismantled in stages over the years. The Gold Reserve Act of 1934 and Nixon's 1971 decision to suspend the dollar's convertibility into gold further devalued the currency.

The purchasing power of a dollar has fallen sharply since 1971, with St. Joseph Partners estimating a decline of around 99% when measured against gold. To illustrate this point, consider a middle-class family that had $5,000 in savings in 1971. At the time, silver averaged about $1.55 an ounce, so the money could have purchased roughly 3,225 ounces.

Fast-forward to today, and those same 3,225 ounces of silver would be worth around $209,000, assuming a price of $65 per ounce. However, it's essential to note that this comparison has its limitations, as savings accounts could have earned interest, and stocks may have generated returns over the same period.