I keep hearing financial experts refer to buying gold as a “speculation” yet label buying high-flying internet stocks as “investing”. Most financial advisors and financial investment firms do not comprehend what gold is and what it represents in an investor’s overall financial portfolio.
I recall a well-known female financial guru on a TV show back in the early 2000s being asked by an investor if they should buy gold. This author and money diva told the investor that buying gold was not a good idea because it had just doubled in price and was speculation and that the investor should “invest” for the long haul by buying the NASDAQ index (Symbol QQQ) when it had already quadrupled. The NASDAQ subsequently lost another 60 % of its value and gold went up another 300 %. This misconception about gold is commonplace and says volumes about the mindset of the people we look to for our financial advice.
Most advisors and financial firms know nothing but stocks and bonds and tout the same to their clients. Holding gold, silver or even foreign currencies is like speaking in tongues to these consultants and any mention of buying these assets is labeled as crazy speculation.
Nothing could be farther from the truth.
Gold has been called the Currency of Kings for thousands of years and for good reason. Gold cannot be printed, minted, or otherwise conjured up by a keystroke-happy bureaucrat. It cannot be inflated or deflated away. It is recognized worldwide from the Tijuana street vendor to the marbled halls of central banks everywhere. An ounce of gold bought a suit of armor and meal thousands of years ago and will still buy you a nice suit and a meal today. It does not rust, rot, or degrade even if buried in the dirt for centuries or left in the deepest of oceans for ions.
It is hard to dig out of the earth, represented a store of value throughout time, and maintained its purchasing value from the day early man first used it as currency. An ounce of gold is worth today about what it was worth in Roman times and before.
There’s not a paper currency or national currency that can hold a candle to that record. In fact, national currencies have rarely survived for more than 200 years before politicians print them into worthlessness, and history is riddled with failed economies and the currencies that represented them.
Gold is not an investment nor is it a speculation. Instead, it should be considered insurance. Insurance against a perfect record of failed currencies by overspending politicians.
Much like house insurance, you hope you never need it but should not hold off buying it because it is expensive.
You wouldn’t hold off buying fire insurance if it got more expensive, would you?
Of course not, and neither should investors balk at higher gold prices.
Can gold go down in price? Of course, but right now gold is rising in price because investors now see a need for insurance against their other dollars losing value. I refer to those “paper” dollars in your wallet that the world seems hell-bent on mass producing at a frightening pace to paper over their debt problems.
But paper dollars are just that: paper. And being paper, they can be printed to the point where people refuse to accept them. I’m not saying our dollar will become worthless someday, although it might at the rate we’re going, gold has always and probably will always maintain a person’s wealth regardless of what the monetary authorities do with our paper money.
By viewing gold as insurance against monetary abuse and possible preservation of your purchasing power, you begin to understand why you might consider adding some.
Its recent rise in price in the last decade indicates that smart money sees risk in paper currencies and the monetary madness we are witnessing.
Not only are individual investors buying gold but entire countries are buying it through their central banks. They’re buying insurance against something, and you happen to hold a lot of that something in your wallet.
A little insurance makes me sleep better at night, how about you?
“Watching the markets so you don’t have to”
(As mentioned please use the below disclaimer exactly) THANKS (Regulations)
This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His website is moneymanagementradio.com. , and was recently voted Best Financial Advisor in Nevada County. 530-559-1214.