For the third consecutive month, US inflation has been lower than expected. Yesterday, the inflation figure (CPI) was released, showing a year-over-year rate of 2.9%, just below the forecasted 3.0%. Although inflation is not yet at the desired level of 2%, this is prompting the Federal Reserve to consider a possible rate cut. The likelihood of a 0.25% rate cut on September 18 is now almost certain, with even a 37.5% chance of a 0.50% cut.

Disclaimer: The probability of changes may be adjusted depending on future developments in the financial markets.

Invest in Gold

Although I cover this monthly in my newsletter, I think it's useful to briefly explain what the CPI is and why it’s such an important gauge for the Federal Reserve in determining interest rates. These rates, in turn, affect your investments in precious metals.

The Consumer Price Index (CPI) measures the price changes of a basket of goods and services that represent the spending habits of the average consumer. This "basket" includes various categories of products and services that people regularly buy, such as food, energy, housing, healthcare, clothing, transportation, recreation, education, and communication. The Bureau of Labor Statistics (BLS) collects about 80,000 price data points each month from 23,000 stores and service providers to calculate this index. In the Netherlands, this is done by the Central Bureau of Statistics (CBS).

The weighting of each component in the basket is determined by how much consumers typically spend on that particular product or service. The basket is thus composed based on consumer spending patterns. A large portion of the CPI consists of housing, which represents about one-third of the total index. This includes both rental prices and "owners' equivalent rent," which attempts to reflect the cost of living in a home as if it were rented. The main categories of the CPI are:

Food: 13.4%
Energy: 7.0%
All other goods and services (excluding food and energy): 79.6%

Invest in Gold

These weightings can change over time to reflect shifts in consumer spending patterns. The CPI also accounts for the fact that consumers may alter their spending when certain products become more expensive, by opting for cheaper alternatives, for example.

I calculated the U.S. inflation over the past 10 years, from July 2014 to July 2024, and found a total of 28.4%. If the average income didn’t increase by at least 2.5% annually during this time, many Americans likely struggled to keep up with inflation.

In the Netherlands and Belgium, inflation over the same period is even higher, at 34.5% and 34.0% respectively, based on data from CBS and Statbel. This means that in the Netherlands and Belgium, the average income would have needed to rise by at least 3.1% and 3.0% per year to keep pace with inflation.

Of course, we all need euros (or another currency) for our daily expenses. But what really matters is how you manage the money you set aside for the long term. That’s why I’ve made a comparison of the returns you would have achieved if, from January 1, 2014, you had saved €50 per month in gold instead of in a savings account.

January 1, 2014 - January 1, 2024 (10 years)
Total contribution: €6,000 (12 months x 10 years x €50)
Value of gold on January 1, 2024: €9,107
Profit: €3,107 (51.8%)

Are you considering opening a savings plan? You can set up a savings plan on our website or through the app!

Disclaimer: The information on this webpage is not investment advice or a recommendation, and past performance is no guarantee of future results.

In July 2024, gold ETFs globally attracted an impressive $3.7 billion, marking the strongest increase since April 2022. All regions experienced positive inflows, particularly Western Europe and North America. These inflows, combined with a 4% rise in the gold price, pushed total global assets under management (AUM) to a record high of $246 billion. With central banks on the verge of implementing rate cuts, this trend could potentially continue.

(This will only take you 2 minutes)

Open an Account