This Faith in Finance podcast is underwritten in part by Sound Mind Investing. For more than 30 years, do-it-yourself investors have relied on SMI for proven strategies and trustworthy guidance. SMI helps people build wealth so they can provide for their families, prepare for the future, and give generously. Learn more at soundmindinvesting.org. Gold has been surging this year, but what's behind the rise and what should investors keep in mind before buying in?
I am Rob West. Precious metals such as gold and silver have long fascinated investors, particularly in times of economic uncertainty. But are they wise investments for today? If so, how should we approach them? Mark Billard joins us today to talk about investing in precious metals.
And then it's on to your calls at 800-525-7000. This is Faith in Finance, biblical wisdom for your financial decisions. We always enjoy having Mark Biller with us. He's the executive editor and senior portfolio manager at Soundmind Investing. And when it comes to precious metals, his insights are truly valuable.
SMI has just released a brand new special report on investing in precious metals, free for faith and finance listeners. You can download your copy at soundmindinvesting.org. Mark, great to have you back. Thanks, Rob. Always a pleasure.
Mark, gold is now approaching four thousand dollars in ounce, up from about two thousand six hundred at the start of the year.
So what is driving this surge? And do you think the momentum will last? Yeah, it's been quite a run for sure, Rob. I mean, gold was up 26% last year, and it's followed that up with roughly a 50% gain so far here in 2025.
Meanwhile, silver is up 60% this year. Gold mining stocks have more than doubled. There's an old saying, there's no mania like gold mania, and that's currently playing out right before our eyes. You know, there are a few reasons that gold has really taken off over the last few years. One of the biggest is that global central banks have been buying gold aggressively.
That trend has been around for a while, but it really kicked into overdrive in 2022 when the U.S. froze and then ultimately confiscated Russia's dollar reserve assets after the Ukraine invasion. The other big reason that investors are piling into gold is the increasing concern about the loss of purchasing power that comes along with currency debasement. And while the first leg of this gold bull market in 2022, three, and even last year was largely about the central banks buying. This year, we're starting to get institutions and individual investors involved in this precious metals trade as well.
You know, if we look back, the runaway government spending since COVID, both here in the U.S. and all around the globe, is really driving this debasement fear. And as other countries and investors lose confidence that the U.S. isn't going to just try to inflate its way out of this debt, the appeal of treasury bonds as the world's preferred savings asset is declining. And gold is just sitting there as the 4,000-year-old alternative.
It's starting to look pretty attractive by comparison. Yeah, that's really helpful. The historical perspective is also helpful.
So how do today's gold and silver prices compare with past cycles? Yeah, that's a great question, because you do have to adjust for inflation over time, especially when you're going back and looking at prices that were set like in 1980.
So, for gold, it has actually set new all-time highs in both just pure dollar terms and in inflation-adjusted terms. It recently surpassed. Its January 1980 peak after adjusting for inflation. It's a little different with silver. It's knocking on the door of $50 an ounce.
That was roughly the peak both in 1980 and in 2011 in pure dollar terms.
Now, in inflation-adjusted terms, silver still has a way to go to surpass those prior highs. It makes sense. $50 in 1980 was worth a lot more than $50 today. And even that 2011 high of $50 or so, that's roughly $70 today.
So, there's a little bit more room to run in inflation-adjusted terms there. It's not surprising because silver often plays catch-up to gold, moving later and more violently.
Now, one thing that's important, Rob, as we talk about these prior highs, is it shows how in the past precious metals have tended to get really hot. Then go through long bear markets where they fall back a lot. And that's an important cyclical pattern for investors to be aware of. You know, after those two prior silver peaks, in 1980, silver fell almost 90%. In 2011, it fell back about 70%.
For a long time, precious metals investors, that's definitely something they remember vividly. Mark Biller here today. Check out more at soundmindinvesting.org, and we've got a lot more to come just around the corner. Stay with us. Imagine having biblical financial wisdom delivered to your inbox every week, helping you integrate your faith and financial decisions for the glory of God.
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Soundmindinvesting.org Great to have you with us today on Faith and Finance.
Well, gold has been surging this year. We're talking today with our good friend Mark Biller, executive editor and senior portfolio manager at Soundmind Investing, about why the rise and where it might go from here and perhaps its place in your portfolio. By the way, SMI has produced a brand new special report on investing in precious metals, and it's free and available for Faith and Finance listeners.
So head over to soundmindinvesting.org to pick up your copy. Again, that's soundmindinvesting.org. Mark, some would argue that gold isn't really an investment in the same way stocks or bonds are. Why is that? Yeah, you know, Rob, it's the same reason that it's so tricky to value what gold's price should be.
You know, gold doesn't do anything, so there's no income, there's no profit or cash flow to measure. And those are the tools that we use to value companies and by extension, value various stocks and bonds. You just can't apply those measures to gold because they don't exist.
So that's one big reason why a lot of people view gold more as a store of value than as a productive asset.
Now, there are some old rules of thumb. You know, one is an ounce of gold used to buy a fine men's suit hundreds of years ago, and it still does that today, which roughly captures this idea of the store of value. You can also compare the gold price to other commodities, like the price of a barrel of oil, to get a sense of whether gold's price is expensive or cheap relative to its history. I think what's helpful, Rob, is to view gold as an alternative currency to all of the fiat currencies. And by that, I just mean the dollar, the euro, the yen, all the other paper currencies.
And when you think of gold that way, it's more evident that what's really happening over time is the value of all of our paper monies being debased, while gold is really just holding its value. And right now, gold is getting an added kicker by virtue of many. Investors, including many whole countries and central banks, wanting to hedge their exposure to the fiat currency system and the government bonds that have dominated that system as the preferred savings vehicle. But if you look at it that way, gold really is more of that store of value. It's not the thing that's moving, it's all the value of everything else moving around it.
Which means that it's also a hedge against inflation and call it financial instability, right? Yeah, for sure. It's that historic store of value function that gold's been so good at. And, you know, this is a little tough for us sometimes as Americans because we don't really think about things like financial regime changes, but that's been the reality for a lot of countries and people through history all around the world. And when the whole financial system shakes, or even worse, gets replaced by a new system.
Gold has traditionally been one of the few assets that would let someone transfer their wealth from the old financial system to the new one that's replacing it. You know, less dramatically here in the US, we've all seen the impact of higher inflation over the last five years or so. And saving in dollars in that type of environment, when those dollars are rapidly losing value before your eyes, it's just unappealing to do that.
So, saving in an alternative currency like gold, which typically appreciates in value as the inflation occurs. That's a lot more appealing. I think one of the big drivers, Rob, of all this precious metals. Mania going on right now is that over the last few decades we've seen the pattern repeat. That whenever the financial system or the economy wobbles, the government's knee-jerk reaction is to stimulate and print more money.
And so against that backdrop, precious metals seem like a good hedge against any future crises, and that investors have always been attracted to metals when fear is high. There are just lots of things to be nervous about in the world today. Hmm. Yeah, that's helpful. Mark, when it comes to gold, silver, and mining stocks, how should investors think about the differences?
Very important question, and there are big differences.
So, gold is the steady, widely traded metal, it's the core holding of the precious metals portfolio, if you will. And very importantly, this is what central banks have been buying. We said earlier, this was one of the big drivers. There's no reason to think that's going to change. That's an important reason to think that this gold bull market may last a while.
But, importantly, central banks are buying gold. They're not buying silver. They're certainly not buying mining stocks.
So, it shouldn't be a shock if gold itself stays reasonably strong, even as we see silver and mining stocks maybe go through their typical up and down cycles. Silver is cheaper, that's the main reason it's so attractive to individual investors. It's a lot more volatile than gold, and its performance is tied more closely to the economy.
So, in fancy terms, we say that gold is a monetary metal, another currency. While silver is really more of a hybrid between a monetary and an industrial metal, we just mean by that that silver is used in a lot of electronics, things like solar panels.
So, a recession can impact demand for silver a lot more directly than the demand for gold. And then mining stocks, Rob, they're kind of like your crazy uncle. You know, they can be a lot of fun when the party starts heating up. But they're also volatile. They're kind of dangerous.
If you look long-term, precious metals mining has been a terrible investment.
So, mining stocks are more of a short-term speculation. They should really be handled with a lot of care. And the fact that they've more than doubled this year already means they're quite a bit riskier at today's prices than they have been. Yeah, this is really good. Mark, is there ever a reason to think beyond gold and silver when we talk about the metals, let's say, platinum or something else?
You know, some people do, and there's nothing wrong with that. You know, platinum has been playing catch-up to gold recently with strong gains. Platinum and palladium are even more tied to industrial demand, especially autos.
So there's nothing wrong with it, but it is a smaller, more specialized market. Prices can really swing sharply.
So most precious metals investors keep it simple with gold and silver. Yeah. Let's talk practically for a second on how you own this in your portfolio. I know you've shared in the past a combination of ETFs and the physical metal might be the best option. Help somebody think through that.
Yeah, that's exactly right, Rob. That's how we do it at SMI, and that's because there's a trade-off. You know, physical bullion gives you direct ownership. But you also have to think about storage and security. You probably don't want to have a lot of physical gold stored in your home.
On the other hand, precious metals ETFs are really convenient. You can buy and sell them very easily in a brokerage account. But a lot of investors want at least some hands on exposure to their metals in case of extreme events.
So we've always suggested using both. We advocate for a core position in physical metals, fairly small, maybe as much as 5% of a portfolio. And we consider that to be basically buy and hold forever. Then we supplement from there. Yeah, sounds good.
Perhaps five up to 10%. This is not a time to chase gold and overweight, but Mark's giving us some sound advice to consider. Thanks for your time, my friend. Always a pleasure, Rob. To learn more about what it looks like to invest wisely in precious metals, go to soundmindinvesting.org where you'll find a free special report.
Your calls next. Stay with us. We'll be right back. Are you a financial professional looking to grow your practice while offering advice that aligns with your Christian values? By becoming a certified kingdom advisor, you'll gain the biblical wisdom and professional credibility to serve clients who are seeking faith-based financial guidance.
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This is the program where we help you live as a wise and faithful steward, understanding that everything we have, everything belongs to God, not just 10%, 100% of everything that passes through our hands. And so, our job then is to be a faithful manager, understanding we don't have ownership rights, which is a game changer. We have stewardship responsibilities, and a steward manages the resources of the master according to the master's wishes.
So, we go back to God's Word, we look at the big themes, and understanding how God is giving us His resources and what His heart is related to how those should be managed well. We also see these principles throughout the Old and New Testament that we can apply to our money management. That's what we want to help you do each day, encourage you along the way, but also get into those very specific issues you're facing and. Paying off debt and investing for the future and transferring money wisely to the next generation, passing character and spiritual capital first and then financial capital, and doing that with intentionality. Thinking about building a spending plan, I realize things are more expensive than ever.
How do you make all those numbers work so there's not more month than there is money on a monthly basis? And we want to help you do any and all of those.
So, if you have a question, we're here. I'm ready to take your call.
So, that number is 800-525-7,000. Our team is standing by at the moment. We've got some lines open, and we'd love to get to your question today again: 800-525-7,000. Let's go to Chicago. Hi, Sally.
Go right ahead. Hi. Thank you for your ministry and your wisdom. I really appreciate it. I have a question regarding real estate property.
I own a building and I live in it. I have a couple of tenants that live in there as well. And the building is about one hundred years old. Very well built though, but still a lot of problems. And I'm able to do a lot of stuff myself.
I come from a working family. My dad was electrician and, um most of my family was involved in real estate.
So But the problem becomes that I'm never able to deduct any of this stuff on my taxes. And I still spend a lot of my time or time of my family or friends that I know And in return, I do things for them that they're not able to do, so we kind of barter. Is there a way for me to charge for my time or some of the time that is donated for these projects and still stay within the lines of law? Yeah, unfortunately, there's really not a great option. I mean, I would always check with your CPA to make sure you're not missing anything because I'm not a CPA.
But the answer, unfortunately, is no. As a landlord, you can't deduct the value of your own labor on a rental property, even if you act as the property manager or perform maintenance or repairs yourself. This applies whether you're full-time or part-time as a real estate investor.
Now, there are still plenty of things you can deduct: mortgage insurance, property taxes, insurance, repairs and maintenance not done by you, utilities, depreciation, legal fees, advertising, supplies, just not the work you do yourself, unfortunately. But get that CPA to look over what you're doing and see if you're missing anything. To Louisiana. Hi, Isaiah. Thanks for calling.
Go ahead. Hi, so I had a question regarding Yeah. I have some credit card debt that I accumulated. And it's around seven or eight thousand dollars. And um basically I will be moving and leaving my current job where I I have a 401k about the same amount as my credit card debt.
And I know that if you take out that 401k early, it will have to step. Yeah. And obviously, I would be taxed on that and everything like that. And I was wondering. would it be a right move to basically use that four hundred one K whenever I do get it to pay off that credit card debt or If you have like Any things on that?
Yeah, I have a better option for you, Isaiah. I love the fact that you have that 401k money. I do agree with you. Let's try to get rid of that credit card debt as soon as you can. But the 401k is really not the place to go to pay that off.
And for two reasons: number, well, three reasons. Number one, it's expensive money. You're going to, it's all going to be taxable to you on top of the fact that you're going to have a 10% penalty when you take it out.
So, let's say at a starting point, at a minimum, that's probably 32% right off the top that's going to be paid to the IRS when you pull that out. Second reason is that money is no longer available to compound and grow for your future. And when we look long term, you know, that is going to be a real benefit to you, and you want to continue to fund that over time. The third reason is, and this is a big one, is I really want you to fix what got you into that credit card debt in the first place. And my experience and the studies say that if you come.
Come in and just wipe it out. With kind of a quick fix. And that's what I would see pulling the money from the 401k to pay it off being it just doesn't involve you changing your habits, dialing in your lifestyle spending, which is probably what got you into the credit card debt in the first place, spending beyond your means. And so I'd rather you take a more systematic approach to budgeting that allows you to pay this off quicker, but rights the ship, if you will, with regard to just your disciplines and your habits of money management. And so what I recommend is what's called debt management.
Our friends at ChristianCreditCounselors.org can help with this. They're going to get that interest rate down. They'll probably, in some cases, even cut those interest rates in half or more. You're going to make one level monthly payment to them. And with the combination of the level monthly payment every month and the lower interest rates, you're going to pay it off 80% faster.
But they're going to help you work on your budget and get your spending in line, which I think is going to lead to a long-term. Fix and change for you.
So just go to ChristianCredit Counselors.org. Let's tackle some emails today. By the way, Jared sent this recently. He said, We recently discovered some stock certificates from 1970 that my grandparents owned. How can we find out whether these certificates have any redeemable value?
Let me tell you, Jared, first, you just want to check to see if the company still traded on a stock exchange. You can do this at many major financial websites. You can also try to contact the certificate transfer agent, which should be listed on the certificate itself.
Now, if the transfer agent no longer exists, you'll want to contact the state agency that handles incorporation where the company was established. That office may provide a way to search online for information on that company. Many public libraries also have reference materials for old stock certificates. If all that fails and you have a brokerage account, you can ask your broker if they can help you determine the value of the certificates. Provide that QCEP number that's C-U-S-I-P.
You'll see that printed on the certificate, and hopefully, they'll be able to help you. I think you'll get there. It may take some legwork, but thanks for writing to us. By the way, if you have a question, send it along. Askrob at faithbuy.com.
Well, folks, that's going to do it for us today. Big thanks to my team today, the amazing Josh, Omar, Taylor, and Tahira, plus everybody here at Faith Phi. Listen, if you love the program, one of the things you could do to help us reach more people as a listener supported ministry is become a FaithFi partner when you support us at $35 a month or $400 a year. We'll send you great resources. Learn more at faithfy.com slash partner.
We'll see you tomorrow. Faith in Finance is provided by FaithFy and listeners like you.
