GOLD IS TRUE WEALTH

Ask a cross section of Americans what true wealth is and you will get a lot of different answers. These will range from cash in the bank to real estate, stocks and bonds, shares, and physical assets like vehicles art etc.

Wealth and value defined

Let’s look at a definition of wealth. Wealth can be defined simply in the following terms “Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions”.

To be fairly described as a truly valuable “asset” it needs to have the following qualities. It needs to at least hold its value no matter the state of the economy and ideally it should be increasing in value as time goes on at a rate that outstrips inflation thus preserving its transactional power.

With the economy at high risk of turning recessive [if not already there depending on what metrics you employ] this definition becomes even more important. With the Federal Reserve engaging in money printing on a massive scale the US dollar is becoming increasingly devalued in terms of its spending power. So cash in the bank is going down in value on a daily basis. Recent reports have shown that new home borrowing is down dramatically, people are not buying property. If people aren’t buying the general property market will start to decline, and whatever property you own will almost certainly be negatively impacted value-wise by this trend. The same can be said of stocks, bonds and shares. When general market sentiment is negative and the economy is contracting all the various stock indices will typically turn negative. Assets can no longer be classed as “valuable” if their transactional value is constantly being eroded.

This is understandably a massive concern for many Americans. People work all their lives with the purpose of being in a comfortable position when they choose to end their working lives, not only that but to leave a financial legacy to those they care about when they die. Watching those hard won earnings erode more and more each year is not an option for many people so they are exploring alternative investment options.

Gold as a symbol of wealth- A cultural perspective.

Foremost among those alternative options is an old friend… Gold. Gold has always been considered as “wealth” going back into the mists of antiquity to the ancient Egyptians who actually worshipped gold, believing it to be a divine material holding magical powers. Pharaohs were buried with their gold and the use of gold in their incredible mummy masks was related to their belief that their sun god Ra actually had flesh of gold. Gold is worshipped in a multitude of different cultures, in Buddhism it is symbolic of their Sun god Surya, and in Judaism it is symbolic of celestial light. Gold in many countries and cultures is considered heavenly or holy and is used to adorn their idols and gods as a sign of their highest respect.  

The concept of gold as something of extreme value still very much has a place in modern language. How many times have you heard someone use the phrase “This [whatever the product is] is the “absolute gold standard”. We use the term gold in our language to describe something that is exceptionally good, as in “good as gold” or “that is pure gold”. 

The “Gold Standard”

The financial term “Gold Standard” was used to describe a system where every US dollar in circulation was backed by the equivalent amount of gold. This system was officially ended by Nixon in 1971, but really ended decades before because the system couldn’t keep up with consumers demand for cash. The current Federal Reserve money printing fiasco simply could not have happened under a Gold Standard as they could not have realistically sourced enough gold to back what they printed. Sadly this scenario is having an increasingly negative effect on the US dollar, which is declining in real value and purchasing power as it is effectively backed by nothing but the word of the government. It is not only the dollar that has devalued dramatically once the Gold Standard was abandoned, the British Pound also went through the same devaluation when Britain finally abandoned the Gold Standard in 1935. Interestingly, it was initially abandoned at the start of the First World War but Britain returned to it in 1925 because the monetary stability it provided was seen as key to the economic recovery. 

The US Dollars current problems.

A very recent development does not bode well for a US Dollar already struggling, due to inflationary pressures and excessive and ongoing money printing by the Federal Reserve in an unsuccessful attempt to combat this. On January 17th 2023 the Saudi Minister of Finance Mohammed Al Jadaan announced that “There are no issues with discussing how we settle our trade arrangements whether it is in the US dollar, whether it is in the Euro or the Saudi riyal” No longer do global oil payments necessarily have to be settled in US dollars as was previously the case. The end of the Petrodollar will certainly weaken the US dollar as a medium of global exchange, because foreign countries will no longer have to purchase US dollars in order to fund global oil purchases.

Peter Schiff Financial commentator and CEO and chief global strategist of Euro Pacific Capital a renowned investment strategy advisory company sees more woes on the horizon for the dollar and the US Economy.  Schiff made the following comment recently “We are going to see accelerating inflation, and I think before the year is over we are going to take out that 9% inflation high of last year, and that will show that what the Fed has done so far is completely ineffective in its fight against inflation”. 

On March 9th Fed chair Jerome Powell admitted before the Senate Banking Committee that inflation was not dropping anywhere near as much as was hoped, and that the Fed was prepared to raise interest rates more aggressively in order to combat this. This is not good news for the markets or the US Dollar.

Gold Investment as a Solution to Inflation.

Peter Schiff is also a huge fan of gold investment and is confident that the value of gold will rise dramatically in a world where the value of the dollar is eaten up by inflation. 

Gold is considered by many investors to be a “safe haven asset”. A safe haven asset is “an investment that is expected to retain its value, or even increase in value, during times of market turbulence” In troubled financial times money migrates to safe haven assets from riskier investments like stocks and shares and the smart money rides out the storm with their assets intact.

Another serious tailwind for gold investing is the possibility that Russia and Iran will create a gold backed stablecoin. According to Russian news site Vedomosti a possible collaboration between the two countries is in the offing with the intention of creating a “commodity-backed stablecoin that will be pegged to recognized assets like gold, so the value is clear and observable for all participants”. 

To add fuel to this fire there are also rumours of Chinas involvement in this project too, as they have been buying gold in a serious manner with one purchase alone of 80 tons of Swiss gold last July valued at $4.6 billion dollars”. If this does happen it opens up the likelihood of solid ongoing large scale demand for gold which will have a very positive impact on its value, and make gold investing now a very timely decision. 

If this scenario comes to pass it will be very likely that other countries may well follow suit and effectively re-value their own national currencies by pegging that value to gold. Potential gold buying on an international scale by sovereign nations will create a massive and ongoing demand for gold which will have hugely positive implications for the price of gold going forward. Many market commentators are predicting that gold is heading for a major bull market for the next three to five years at a minimum making now an excellent time to buy gold.

Americans increasingly look to Gold to protect their wealth.

For all of the aforementioned reasons more and more Americans are looking at protecting their wealth by investing in gold. Gold investment is becoming increasing popular for very good reason. Increasingly people are becoming concerned about the erosion of their lifetime’s accumulated savings and assets due to inflation and the continued erosion of the real purchasing power of the dollar. Luckily it is now easier than ever for people to get involved in gold investing due to the rise of the Gold IRA, where people can now switch either a portion of their existing IRA/401K or the total balance into gold with relative ease, and without financial penalty from the IRS. Smart financially aware Americans who have amassed substantial wealth during their working lives are looking at protecting that wealth by setting up their own Gold backed IRA accounts. Legendary American football Hall of Famer Joe Montana is one of the individuals who has made this decision as is Mark Levin, lawyer, commentator and host of the syndicated radio show “The Mark Levin Show”.

The rise of the Gold IRA Provider.

The rise in the popularity of gold investment means that companies offering gold IRA accounts are on the rise, and it is now much easier and user friendly to buy gold and /or convert your IRA to gold. A reputable gold investment company assists buyers to on-board easily, and advises them on the best way to set up a gold IRA, or to purchase whatever quantity of gold or precious metals that they wish to add to their portfolio. A reputable Gold IRA company will answer all your Gold IRA questions and advise you on exactly how to set up a Gold backed IRA account.

A Final Word on Gold.

A final word on the “value” of gold by Juan Carlos Artigas, head of global research for the World Gold Council, a body committed to promoting gold consumption worldwide, and one with huge insight into gold markets and market trends. Commenting recently on the continuing trend for large gold purchases by international central banks, Artigas was quoted as saying “Even though gold is not backing currencies anymore, it is still being utilized. Why? Because it is a real asset”.

That in a nutshell sums up the case for gold perfectly, it is a “real asset” in a world where a lot of other so called assets are in a process of constant devaluation and erosion.