Learn how to protect your retirement savings.
Advantages of Owning Gold
Gold has been proving its worth since antiquity
It is believed that gold came to Earth via asteroid showers several billion years ago. The precious metal is a very rare resource, which is one reason why it was selected to be used as currency and why it is the only type of currency that has maintained its value over thousands of years.
Physical gold can withstand inflation, financial crises, market collapses, and political unrest far better than paper currencies and other paper assets. That is why investors have pursued physical gold for centuries. They flock to the precious metal at different times, depending on only a handful of factors that can move the price of gold higher or lower. Sometimes, these gold price drivers can make the price of gold difficult to predict. Now is not one of those times.
“If you don’t own gold, you know neither history nor economics.”
— Ray Dalio, 2019
The reasons you should invest in gold today
- Crisis protection: People call gold the “crisis commodity” for a good reason. It’s a safe-haven asset that investors rush to in times of economic uncertainty, political turbulence, or military conflict. This is a fundamental trait of gold. For example, after the financial crisis in 2008, gold jumped from below $700 per oz to over $1,900 per oz in just three years because investors were escaping risky stocks and bonds. Today, the effects of the COVID-19 pandemic have been sending political shockwaves across the globe, which has caused the price of gold to soar and clearly outperforming other assets. If you believe more damage is coming to our economy and markets, you should be invested in physical gold to hedge against those risks
- Hedge against inflation, currency debasement, and the dollar losing value: Many investors buy gold to protect their portfolio from inflation and the deteriorating value of the US dollar. When our Federal Reserve and central banks print money, they debase our paper currencies, and gold becomes more valuable. This has happened over the past 20 years, and it is the reason gold has provided an annualized return of over 26% over the last 20 years, rising in value from $280 per oz in 2000 to its current price, while the dollar has dropped in value. Gold’s performance is astonishing during times with runaway inflation, so many investors keep a portion of their portfolio in gold. The last time we saw runaway inflation in the US was from 1977 to 1980; during those years, gold climbed over 8 times and silver climbed over 11 times, while interest rates and inflation surged higher.
“Gold is money. Everything else is credit.”
– J.P. Morgan, 1912
- Protection from government debt and deficits: When our US national debt levels decrease, the dollar strengthens, and when debt levels increase, the dollar weakens. From 1996 to 2000, for example, the US government created a budget surplus and paid down its debts; during that period, gold lost 40% of its value. Since then, our deficit began growing—and so did the price of gold, providing a total return of over 538% since 2000 or an annualized return on investment of over 26%. Today, US national debt is growing by over $1 trillion annually, and there is no end in sight. This means that during this decade, the price of gold will only keep climbing. Bank of America recently declared that it projects the price of gold to hit $3,000 per oz by the end of 2021.
- Protection against stock market declines: When confidence in the stock and bond markets diminishes and investors start to get scared, they will move into gold, causing its value to rise. Over the last 20 years, every stock market correction was accompanied by the gold price rising, so any investor with the right allocation of gold in their portfolio was able to offset stock market losses. In 2020, while the stock markets have crashed, the gold price went up by over 15%, doing its job to protect investors’ portfolios.
- Control and true diversification from banks and the financial industry: What any investor wants is control. Your stocks and bonds are not controlled by you. They are manipulated by insider trading and information you don’t follow. They are placed in retirement accounts you pay heavy fees every year to carry. Your ultimate goal is to control at least a portion of your investments and get them out of the hands of the financial industry. Also, you cannot diversify stocks and bonds with other types of stocks and bonds. Physical gold and silver have a track record of true diversification because they are a real, tangible assets not dollar-denominated paper assets like stocks and bonds. Gold and silver have proven their value as a true store of wealth for thousands of years.
“Gold is the asset of the next decade.”
— Ray Dalio, 2019
People compare investing in the stock markets with gambling at a casino, but your retirement savings shouldn’t be gambled with. When stock markets drop, so do retirement accounts that are invested in stocks and bonds, which forces you to add several years to your working life. The best way to avoid this is to take control of your own retirement protection: Diversify your portfolio with physical precious metals.
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