Bill’s Blog | September 22, 2022
I have been a strong advocate for the ownership of physical Gold and Silver for over a decade. My goal was never to convince people or use fear tactics but to encourage them to educate themselves first and come to intelligent conclusions. But unfortunately, I have observed by sitting with hundreds of people over my career and doing over 150 financial seminars that most people will never take action for one simple reason. The main reason is they will not spend a few hours reading a quality book or watching proven experts on the topic. Therefore, if you do not understand WHY you should purchase Gold or any investment, you will never buy it. Now, you may be thinking that it is way too simple. But I am convinced it is 100% accurate, and of course, there can be other reasons like having no extra capital, timing, assets tied up in other investments, etc. People use busyness as a common excuse; however, we all need to make the time when something is significant to our financial futures. So, please entertain me for two or three minutes, and I will build a case for gold ownership as part of your wealth. But, even of more importance is that you can read an excellent book for free, which I offer you at the end of the Blog. Mike Malony’s NY bestseller explains why you should consider owning Gold as part of a balanced and diverse portfolio. First, a brief history lesson. Second, the top 10 reasons to own Gold and my offer and conclusion.
As with Silver, Gold has a long history where humankind and empires have sought it for its incredible beauty and rarity. As a student of history and the Bible, I have found it interesting that the mention of Gold is frequently related to specific ancient empires, lands and the wealth of kings and Nations. For example, the first quote in the Bible, Genesis 3:11-12, states, “that Gold was found in the land of Havilah and the Gold of that land is good.” The incredible historical account of Israel’s story of deliverance from the cruel slavery of Egypt adds a unique twist. God instructed Moses to tell the Israeli people to request Silver and Gold jewelry (their wealth) just before they exited Egypt (a superpower at the time), and the oppressors complied. Exodus 11:1-2, and the ten plagues God brought against Pharaoh and the land clearly was a motivator!
Kings and kingdoms come and go, but clearly, the superpowers of the ancient world stole, mined and amassed Gold. King David had incredible wealth and, in his devotion to God, gave 3000 talents of Gold and 7000 talents of fine Silver towards building the first Temple of God in Jerusalem. I Chronicles 29: 3-4. Solomon David’s son, who would build the Temple, also amassed enormous amounts of Gold, and his annual increase was over 666 talents of Gold. To put that in perspective, Solomon added about 20,000 tonnes of Gold per annum to his treasury. Today, all the major central banks combined have about 35,000 tonnes, so they are poppers compared to King Solomon.
Centuries later, the great Nebuchadnezzar, King of Babylon, had an ego problem. He had a 90-foot high statue built of himself and had it covered with Gold, and of course, the egomaniac demanded every person in his grand empire to worship him via his statue. History repeats, just different actors on the stage, but if you want to build a glorious kingdom, make sure you have lots of Gold!
To be clear, little has changed in modern times. However, in the 20th century, superpower status transferred to the USA from the British Empire after WW2. Why? The USA entered the war late but actively supplied its Western allies with supplies and weapons. Guess what they required in payment? You are correct, Gold! By 1945 the US treasury has built up a massive horde of Gold totalling 22,000 tonnes. He who holds the Gold has the power. History repeats.
Top 10 Reasons to Own Gold- physical Gold in private storage.
- Gold is real money and preserves your wealth and purchasing power long term. All fiat currencies (paper) fail and eventually go to zero. Over 100 currencies globally are severely devaluing, and I see this trend growing due to extreme debt levels.
- Gold stored outside of a bank has no counterparty risk. If you pay cash and have it adequately stored or vaulted and insured, your Gold asset will be safe, and there is no liability against it.
- Gold is a universal asset and is recognized internationally as pure money. You can take a one-ounce (RCM) Gold Maple coin to almost every country and exchange it for goods or services. Gold is a very liquid asset and easy to sell or trade.
- Gold is a safe haven asset in troubled economic periods (like now) and unstable times. I am sure you know we have a growing global economic storm due to 40-year high inflation, serious supply chain issues, rising interest rates, a fuel, energy, food and fertilizer crisis, and record unsustainable debts. In addition, we have a tragic war and the risk of acceleration. Putin warned the West/Nato; he would use nuclear weapons if necessary. Also, we have growing civil unrest in dozens of countries as life as they once knew it is slipping away. You get the point. Gold acts like an insurance policy in periods of extreme crisis.
- There are two Gold markets—paper contracts which currently have about 140 contracts per ounce of Gold. I strongly recommend avoiding any such product representing Gold that is not physical, and you can put it in your hand, like an ETF or derivative contract. If you are in these products and cannot take personal delivery, I recommend you sell them if you are in profit and purchase investment grade bullion which is your best option.
- Gold is a tier-one asset (changed a couple of years ago by the powers to be), and they made Gold equal in value to a US dollar or treasuries. Why? Central banks, major financial institutions, sovereign wealth funds, and wealthy family offices fold substantial holdings in physical Gold. Remember, they, too, understand that Gold is a safe haven asset in times of crisis.
- Despite modest Gold performance in US dollars in the last couple of years, it has held up quite well. In many currencies, Gold has outperformed. Gold is up 15% in the Yen and the Euro 9% this year alone. At the end of 2015, Gold’s price was $1050 and finally broke out to a $1300 range from 2016 to 2018. The next leg up started in 2019, and Gold exceeded $2000 US an ounce. Gold today is just hovering around a crucial support level of $1680. We will see how things play out, but I am not concerned as an investor as I have a 5 to 10-year time horizon. Many Gold experts see a $5000 to $10,000 or above price range in the coming decade. Remember, when things go on sale, that is the time to buy.
- In a prior blog, I discussed the growing divide between East and Western Nations, and trading alliances are rapidly forming. Dozens of countries are tired of US dominance and the dollar system used as a weapon against them (sanctions that do not work). As a result, the Eastern Nations have been amassing Gold as quickly as they can. Whole new gold exchanges have emerged in recent years, like the Shangia Gold exchange, and now Russia plans to create one called the Moscow World Standard to challenge the LBMA. Unlike the West paper contract manipulation and some physical, these new exchanges only allow physical delivery.
- On record, the US has 8000 tonnes of Gold and is supposedly the largest holder of Gold in the world; however, there has been no official audit since the 1950s. Many have questioned if they still have the physical Gold or if it was leased out or sold. Many experts believe China has somewhere between 30,000 to 60,000 tonnes of Gold. They are the largest producer of Gold on the planet and never sell any of their Gold. China has also been the largest importer of Gold over the last decade. A recent estimate from a well-known commodity trader believes Russia has at least 12,000 tonnes. So, remember, he who holds the Gold becomes the superpower. So no surprise, the top 3 global powerhouses are the USA, China and Russia.
- Finally, if you believe Gold is real money, you should save a significant portion of your wealth in Gold (or Silver combined). I prefer hard assets that preserve and create wealth over fiat currencies.
My FREE offer to you and one of the best books on precious metals so you can understand why you should own some Gold and Silver. Easy read and informative (200 pages). Scroll to the bottom of this page to download the book: https://fivefoldfinancial.ca/solutions/why-physical-gold-silver/
Short-term Gold has been under pressure due to rising interest rates, treasury yields and the strong US dollar. So can Gold’s price go lower, of course? But, in the mid-term (possibly six months plus), I see Gold appreciating. Of course, as I have already alluded to, there are too many variables today to predict how it will all play out. But, I am 100% certain that Gold will never go to zero, and you will not regret building up some of your wealth in precious metals in the coming years. So, buy on the pullbacks or purchase monthly and start saving in real money, Gold & Silver.
All the best,
Bill Westmacott, Owner