Welcome back, everyone. And Peter, it's good to see you. We have a great topic today. Should I invest in gold? Welcome back, everyone.
And Peter, it's good to see you. We have a great topic today. Should I invest in gold?
I know this was a question you said you've been getting a lot, so let's dive in. Investors who are concerned about a recession are putting their money in safe havens. Gold is usually seen as a safe haven when markets and economies are facing headwinds. And during periods of high inflation, gold is often seen as a hedge.
We are certainly living in uncertain times right now. So does investing in gold make sense today? Yeah, I mean, it's a tangible asset that's not directly linked to a fiat currency. So I think that there is some comfort in that it's got some real intrinsic value, right? But that value can and does fluctuate. I have no problem with owning gold or investing in gold if that's the way that you want to do it. And there are a couple of different ways to do it.
And we'll talk about that. What I think I have more of a problem with, though, is the way that gold is marketed. There are high, high level spokespeople almost 24 hours a day pitching and touting gold.
Ladies and gentlemen, those commercials cost a lot of money. Tens of millions of dollars a month go into marketing gold. Where does that money come from? Well, it comes from the profits from people who buy the gold. And so when you are going to buy gold, you are not buying it at spot price. You are generally paying a premium 20 to 25 percent above spot price to make your purchase. And then if you did need to convert that gold back into dollars, you are also not receiving spot price.
There's generally probably a 20 to 25 percent discount at the very least on that side as well. And my question is always, if those that are paying these tens of millions of dollars to put these ads on TV, if these celebrity spokespeople truly believe that the collapse of the currency and society was imminent and that gold was going to be the safe haven asset, why oh why in the world would they send me their gold and take my dollars to purchase it? Just doesn't make any sense to me.
That's a very logical question. When investors fear investing in stocks, they flock to gold, which of course increases its value. Since we may still see a recession, should I buy gold now in hopes of beating the herd? Yeah, I mean, again, there is a time and a place for gold is as part of a portfolio or part of kind of a protection plan, if you will. It's almost a form of insurance. Right. And to make a parallel, though, if I have a let's call it five hundred thousand dollar house, I don't take five hundred thousand dollars and put it in the bank and say, well, I'm self-insured.
I don't need to buy homeowners insurance. Right. It's not the best approach to that. And you should never go all in in any asset in a stock, in a mutual fund, in a game of poker. All in doesn't make sense. And a lot of people are so frightened about this right now that I am seeing huge portions of their portfolio going into gold. People are making major, major purchases with gold. Again, it is an insurance against the devaluation or collapse of the dollar.
And with any insurance, what you want to do is you want to pay the least amount possible to leverage and protect the value of the asset or against the damage that the event you're insuring against would cause. And I think the same is true with gold here is that maybe two to three, maybe up to five percent of a portfolio value could present that opportunity for the leverage and the protection. And you could even throw cryptocurrency, although I would do a much smaller percentage of cryptocurrency because what is intentionally meant to be off the radar sometimes has a way of disappearing on us. And cryptocurrencies are far more more volatile, but gold's not without volatility itself. So, again, yeah, if we are worried about economic recession or a downmarket cycle or the devaluation of the dollar, we are probably going to see gold rise in price.
But you shouldn't overexpose yourself to any single asset. It really is kind of an insurance policy against the collapse of what else you can do with your money, which can present you more opportunity for growth over time. So how do I invest in gold then? How do I incorporate in my portfolio or am I simply going out and buying gold bars and burying them in the backyard?
Yeah, I mean, well, there are a couple of ways. And that way is to protect against the potential for the zombie apocalypse. If we've got the zombie apocalypse, if the dollar collapses, then gold in your portfolio is not really going to do much good because you've got to liquidate that position to get dollars back. And that not only is not immediate, but it's not the gold that you were wanting in that circumstance, you're going to end up getting dollars back. So having actual physical gold, yes, that is one way to do it.
There are a plethora of different vendors out there, one that you feel comfortable with that is reputable may be the way to go about it. But my question there is, if that zombie apocalypse did occur, and it's not just your dollars, but it's my dollars, too. And it's every dollar in everyone's pocket that has lost significant value. And we are truly going through some some difficult economic times and and they're looting grocery stores or whatever would happen to to bring about the event where you are actually using your your tangible physical gold.
Well, at that point, is it as much of an asset or is it more of a liability under those circumstances? So, again, there are ways to own it inside of a portfolio. There there are some ETFs for gold or silver.
They're actually high volume. One of the largest ETFs out there is a gold ETF. And that is how you can invest in gold and and whatever movement the price of gold has. You will you will see as part of your investment value in your portfolio. So a couple of different ways to own it. Aaron and either has some credence, but also there's pros and cons to anything.
So I've heard you say the word insurance several times, of course, safe haven. But what if maximizing the growth of my investments is my priority? Well, gold really isn't about maximizing growth gold since antiquity. I mean, it's been used since Roman times, if not before.
Right. Since ancient Egypt. And it has not been a growth vehicle. It has been an asset to store value. And so over our entire history, the same amount of gold still buys about the same amount of stuff as it did back in Roman times. And gold can and will fluctuate again, as we see uncertainty in in kind of stability or inflation or market volatility. The price of gold may spike temporarily, but it also does go down. And in fact, over the last 10 years, we experienced a pretty deep trough in the price of gold since right after the Great Recession until today. It's really just now getting back to where it was back in about 2012, 2013 times. And for a great deal of the last 10 years, it's been down significantly. So it can and will fluctuate in value. But as far as growth, know that other assets are probably more appropriate if your goal is to maximize growth. If you want to protect the value of your portfolio, if you want to preserve the value, that's what gold does, I think, as far as an option, if those are your goals. Interesting.
I'm glad we got to talk through this age old question, really. So Peter, if somebody has questions about how they could or should incorporate gold in their portfolio, what's the best way to reach you? Yeah, give us a call. Rishan Planning, 919-300-5886, 919-300-5886. You can also get in touch with us online. Rich on Planning is what it looks like. It's my last name, Rishan. Rich on Planning dot com. And yeah, I'm glad we addressed this question because I do hear it a lot.
And with all the ads out on radio and TV, I think a lot of people do have questions about it, even if they're not asking it. Absolutely. Peter, thank you. Pleasure.
And thank you. This has been Planning Matters Radio. The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are encouraged to seek investment, tax or legal advice from an independent professional advisor. Any investments and or investment strategies mentioned involve risk, including the possible loss of principal advisory services offered through Brooks' Own Capital Management, a registered investment advisor. Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a quarterly fee for assets under management while insurance products pay a commission which may result in a conflict of interest regarding compensation.
Whisper: medium.en / 2023-10-21 12:28:52 / 2023-10-21 12:32:47 / 4