There is a question hardly anyone asks until it is too late: what is the money you had ten years ago worth today? In most cases, quite a lot less. Not because you have spent it, but because inflation has quietly eaten into it.
Inflation does not appear on your bank statement as a fee. There is no notice. The money is still there, with the same digits on the screen, but it buys less. A little less every year. Over a decade, the difference can be brutal.
"The greatest risk to wealth is not losing it all at once. It is watching it shrink slowly, without noticing."
In this article
What inflation does exactly to your money
With average inflation of 3% a year, a moderate figure, not an exceptional one, €100,000 today is equivalent to a little over €74,000 in ten years in terms of purchasing power. With inflation of 5%, that figure falls below €61,000.
Money in a current account does not earn enough to offset that loss. Fixed-term deposits, at best, only partially cover inflation. Treasury bills and money-market funds can help in specific cycles, but none of them has preserved the value of wealth consistently over decades.
| Initial capital | Annual inflation | Real value at 10 years | Loss of value |
|---|---|---|---|
| €100,000 | 2% | €81,707 | -€18,293 |
| €100,000 | 3% | €74,409 | -€25,591 |
| €100,000 | 5% | €61,391 | -€38,609 |
| €100,000 | 7% | €50,835 | -€49,165 |
Why gold has endured for 5,000 years
Gold is not a fad. It is the oldest and most consistent store of value there is. Entire civilisations have trusted it, and all those that tried to do without it, replacing it with unbacked paper money, ended up paying dearly.
The reason is simple: gold cannot be manufactured, printed or created out of nothing. Its supply is limited and it is costly to extract. When governments print money to finance debt or public spending, as happened on a massive scale after the pandemic, the value of money falls. Gold cannot be printed, and over the long run it has tended to hold its purchasing power, although its price also falls, sometimes for years.
Over the past 20 years, the price of gold has risen more than sixfold. Not because it is a speculative asset, but because money has lost value and gold has reflected that.
Physical gold versus other assets
It is worth distinguishing physical gold, investment bars and coins, from other financial products linked to gold: gold ETFs, futures, certificates. These have a basic problem: they are promises. They are pieces of paper saying that someone holds gold somewhere. In a systemic crisis, just when you most need protection, those promises may not be honoured.
Physical gold has no counterparty. It does not depend on any bank, any government, any financial system. It is real metal, yours, which exists regardless of what happens in the markets. That is its main strength, and the reason why large fortunes have always kept a share of their wealth in physical metals.
"Physical gold has no counterparty. It is not a promise; it is real metal that exists regardless of what happens in the markets."
Investment gold and its tax advantage in Spain
In Spain, investment gold, bars with a minimum purity of 99.5% and recognised minted coins, is exempt from VAT. This advantage, which does not exist for silver or for jewellery, makes the cost of entry significantly lower than in other tangible assets.
Under income tax (IRPF), gold is taxed when you sell, as a capital gain. While you hold it there is no income tax, although it does count for Wealth Tax (and, for large fortunes, the solidarity tax) if you reach the thresholds.
Protecting wealth is not only for large fortunes
For decades, investing in physical gold was associated with large sums, one-kilo bars, private vaults, six-figure transactions. That is no longer the case. Today you can buy physical gold little by little and in an orderly way, whatever the size of your wealth.
What works is periodic accumulation: buying at regular intervals whatever the price at the time. This strategy, known as Dollar Cost Averaging, reduces the risk of entering at a bad moment and lets you build a position over the long term with discipline and without stress.
Protecting wealth from inflation does not take a large fortune to start with. It takes judgement and consistency, and someone to help you choose the format, the custody and the strategy that best fit your case.
How to start
The first step is always the same: understanding what share of your wealth it makes sense to put into physical metals given your time horizon, tax situation and personal objectives. There is no answer that works for everyone.
At Equus Capital we advise on buying physical gold and silver: which format and product for your profile, secure custody through Loomis España (a subsidiary of Loomis AB, a Swedish company with more than 160 years of history) and a long-term accumulation strategy. No financial products and no unnecessary intermediaries. Real metal.