The last few years have been hard. The global pandemic forced us into some challenging changes. We tightened our belts, learnt to brew beer, and hoped that things would get back to normal as soon as possible. No one told us that our society would be changed forever, with no turning back to the way things were. 

You’ve most likely noticed things are getting expensive. One hundred Rand used to go a lot further than it does now. Filling your tank with petrol feels like you’re being punked, and going out for dinner takes budget planning. A trolley full of groceries has never cost more than it does right now. 

Inflation Is Decreasing the Value of Your Money Every Day.

We’ve all heard about inflation, but few know we are experiencing the highest inflation rate in forty years! The value of your hard-earned rands is dropping at a breathtaking pace!

The record-high inflation may seem complicated, but we’ve broken down how this all works in a simple way as well as built the perfect product to deal with it too. Let’s dig in. 

Inflation Is on a Bullet Train, Driven by Money ‘Printing’.

Every government worldwide has a central bank that controls the printing (issuance) of that country or region's currency. To help struggling companies and banks from closing up shop during Covid, central banks ‘printed’ vast amounts of money, pumping it into the economy to keep people spending and businesses earning. It worked, but all your money in the bank is now worth less than before Covid. Why? Well, imagine there are only 100 avos in the world. If someone finds another 100 avos, the value of the first 100 avos decreases because it’s easier to get avos now. Covid money printing dumped hundreds of avos on the market.
So much so that more than 40% of all US dollars in existence were printed since Covid began! 

Inflation Is Decreasing the Value of Your Money Every Day.

Nowadays, central banks don’t have to physically print money. They can make money easier to come by in the form of lower interest rates on debt. Lower interest means easier access to cheaper loans and, therefore, increased spending. If your credit card interest rate is 6%, it's easier to pay it off, and people are happier to spend that money, but if your interest rate is closer to 20%, it becomes challenging to pay that off, so people spend less. 

So rising or reducing interest rates becomes an essential tool used to stimulate an economy.

In response to COVID, the US Central Bank (known as the Fed) cut interest rates down to near zero percent in an attempt to stimulate the US economy. 

But what happens when you make debt cheap, and spending increases dramatically? You get inflation.

Since then, US inflation has gone on to record highs and recently printed an inflation rate of 9.1%. The US Central Bank has now gone from lowering interest rates to raising them in order to slow down the economy and try to slow down this rapid inflation. 
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There have been a number of interest rate ‘hikes’ this year, but the most notable was in June 2022, when they recently raised by 0.75%, which was the most significant rate increase since 1994. ‍

How Does This Affect My Investments?

Jerome Powell, the US Federal Open Committee chairman, holds the opinion that “inflation will come down drastically in the second half of this year”. This opinion is optimistic and highly unlikely to unfold. Japan has more chance of winning the next football world cup. Unfortunately, inflation is here to stay. Hopefully, it will begin to decrease this year, but it will be a long process. 

We sit in uncertain times - where inflation is running wild, and global growth is slowing down. 

During these times, many ‘smart money’ investors look to protect their assets from the effects of inflation while still trying to gain exposure to some form of capital growth.

Certain assets accomplish this critical task of protection from inflation - namely - Gold and Bitcoin.

The Perfect Inflation Protection Crypto Bundle

Our team at Altify, a Cape Town-based investment platform backed by JSE-listed Sabvest, developed a one-of-a-kind bundle that offers you inflation protection, as well as, the upside potential offered by cryptocurrencies.

We’ve called it the Shield Bundle — an algorithmically optimised investment basket, giving you the protection of gold with the performance of Bitcoin through a single investment. The ratio of gold to Bitcoin within the bundle is based on historic risk vs return data aimed at maximising returns while taking on the least amount of downside risk possible. 

Currently, the bundle consists of 75% Pax Gold (a cryptocurrency backed by 1:1 physical gold in London Brinks vaults) and 25% Bitcoin (digital gold for a digital world).

“This is the perfect Bundle for those investors looking to protect themselves against inflation by taking the best aspects of both Gold and Bitcoin into one product.” - says Chris Beamish, Investment Analyst at Altify.

“The really cool part about this Bundle is that you get the safety of Gold for when times are tough, and when the market turns around, you get the performance of Bitcoin too. Since it was created, this Bundle returned nearly 4 times the return of gold.” - Continues Chris.

The Shield Bundle offers protection against rising inflation, allowing you to ride out the current market volatility while making the most of the rising gold and Bitcoin trends. The inclusion of Bitcoin gives you just enough growth exposure to allow you to spring back from the dips, while the high percentage of Pax Gold anchors your investment against the money printers. The Shield Bundle is an invaluable tool to add to your portfolio, allowing you to hedge and secure value while facing curveballs.