Source: Are you looking to make an investment which will keep you in a comfortable standard of living during your retirement? Have you considered gold as the effective hedge against inflation which will support your dreams? Retaining your purchasing power is a tough job against inflation which is why it is important to have a good method of investing your wealth. If you're interested in learning more about investing your wealth for the future, then give 20 minutes to listen to this episode of Sound Investing. Your host Erik Reynolds interviews Byron Striloff, Senior Investment Advisor at CIBC Wood Gundy about the use of gold as an effective hedge against inflation in this economic climate. How you invest your wealth today can have serious consequences for you when it comes to retirement. Generally wages rise with inflation. But as Byron Striloff explains, the returns from certain investments can mean you are being robbed of your wealth by the stealth enemy of savings and investments; inflation. Protection from Inflation Byron explains that if a person makes an investment which is giving a real return, that return must be giving them something back which is higher than the inflation rate. For instance should a person invest in something which gives them 2.5%, against the average US inflation of 3%, they would make 0.5% loss. Byron would like to point out however that the 2.5% return does not include the tax payable. With this added to the equation, a person might find they are making a 1.5% loss on their investment over a period of time. An effective hedge against investment is supposed to protect the investor from this. If it is the right investment, then the purchasing power of the individual is not weakened. For this to work, investments must be in things which maintain or increase in value above inflation. Is Gold Effective as an Inflation Hedge? Byron states the concept of gold being an effective inflation hedge comes from the 1970s, where the price of gold was indeed increasing greater than inflation. But whether this is a long term solution or if there is a better option depends on several questions which he talks about in this edition. These questions are: · How does the price of gold compare with the rate of inflation over the longer period? - What affects the price of gold in the long term? - Is there a strong link between the price of gold and economic conditions? - Is there an alternative commodity which offers better protection? - Could you invest in something else which will give you a better return on your investments? By finding out the answers to these questions and by asking yourself what you want for your retirement fund, you can decide whether gold is an effective hedge against inflation. Are You Going to Invest in gold? Are you thinking about investing in gold? Do you think there is something else which you can invest your wealth into? Listen to Byron on the podcast and drop back to give us your thoughts or to ask a question. CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. Byron Striloff is an Investment Advisor with CIBC Wood Gundy in Surrey. He and his clients may own securities mentioned in this column. The views of Byron Striloff do not necessarily reflect those of CIBC World Markets Inc. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor. Insurance services are available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are available through CIBC Wood Gundy Financial Services (Quebec) Inc. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors. CIBC Wood Gundy #408 -1688 152 St Surrey, BC V4A 4N2 Phone #: (604) 535-3700 Website: www.cibcwg.com/white-rock -- www.byronstriloff.com Email: byron.striloff@cibc.ca...(read more)
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