Savings Accounts, Spaghetti, & Silver!
– by Zoltan Erdey
You will get a greater long-term return investing in silver, rather than a standard savings account.
“The silver is mine and the gold is mine saith the Lord.” – Haggai 2:8
The four major South African banks will pay you around 5% interest per year on a typical 32-day fixed deposit. Now, let’s rewind to January 2006, when the spot price of 1 troy ounce of silver was about R50.00. Today, the same troy ounce of silver costs around R225.00. That is 450% growth over a ten-year period. Let’s do the same exercise and take that R50.00 spent on ounce of silver and put it into a savings account. Fast-forward to today. How much has that R50.00 earned in interest? Even applying a generous 8% interest rate per year over ten years, the balance would have increased to just under R120.00. It seems offering 5% interest on savings, but charging more than 20% for borrowing borders on exploitation.
Savings accounts are poor protectors of money
Tongue in cheek, Jarod Kints said it best: “A dollar here, a dollar there. Over time, it adds up to two dollars..” I am not advocating closing savings account. I am simply suggesting that a savings accounts is a poor facilitator of inflation protection. Comparing interest rates paid by banks on a typical savings account and compare it with the inflation figures of selected products between October 2015 and October 2016 (National Agricultural Marketing Council-Food price monitor report): Grain Products: Spaghetti 12,89%; Loaf of White Bread (700 g) +8.52%; Rice (1kg) +11.00%; Margarine (1kg black) +10.38%. Fresh and Processed Fruits and Vegetables (per kilogram): Onions +31.21%; Baked beans +12.74%; Potatoes +25.21%; Bananas +34.21%.
From October 2015 to October 2016, the cost of the basic urban food basket increased by +12.1%. The point is painfully obvious: it is better to buy spaghetti and sell it one year later than to put all your savings into a savings account!
How can you guard against inflation?
Though becoming a spaghetti trader is seemingly sound advice, is there a better option that requires less storage space? More seriously, what can an average person do to guard against inflation and preserve the value of his hard-earned currency? One way to ensure preservation of wealth against inflation is to purchase something that cannot be inflated into oblivion, namely, physical silver bullion.
The economic fundamentals for physical silver point to much higher prices in the medium to long term and if history is anything to go by, silver investors and stackers are in for an exciting ride. “Dishonest money dwindles away, but whoever gathers money little by little makes it grow.” – Proverbs 13:11. It is time that Christians save the honest and wise way.
JOY! Magazine (June 2017)