Investors and central banks around the world are stockpiling gold at levels that we haven’t seen in 40 years as we prepare for a likely recession and global meltdown. Over the past 20 years, contrary to popular belief, Gold has significantly outperformed the S&P 500 by a long shot. While the S&P 500 has returned an excellent +136%, Gold has returned an outstanding + 497% and rising. Just looking at this year the S&P 500 has returned 14% while Gold has returned over 17%.
An old story we’re all familiar with called “The Tortoise and the Hare” comes to mind when I think of the race between stock vs gold. In this real-life story, Gold is the tortoise, and stocks are the hare. We all know how this story ends… the slow, steady tortoise wins. While stocks are whipsawing wildly, Gold is moving at a consistent pace and is winning this race.
Gold is a rare natural element that is made by God and has stood the test of time as money for over 5000 years and will never be defeated. Gold has always had objective value because it has properties that are in demand and needed to produce tangible goods. Unlike my greenbacks here, one cannot print gold; it must be mined from the Earth.
So why gold? Investors buy gold as protection from inflation, war, recessions, panics, political unrest, and Wallstreet debauchery. To understand the case for Gold, you must understand the foundation and treacherous history of money.
Once upon a time, our currency was backed by the gold standard. Back then there was an actual value to what we consider money because the paper money was married to gold. There has never been a paper currency that has not failed… ever! Even the mighty dollar will have its day in the future. But gold cannot be destroyed. This is why gold is real money!
Gold is the equalizer that keeps balance throughout economies across the world. But the problem with gold is that it restricts the government from injecting money in the marketplace that doesn’t belong. Historically, countries could not print money if they didn’t have the gold to back it. When a government injects money into the system, it devalues its currency, thus robbing its citizens of their purchasing power; creating inflation. Countries needed to print more money than they had in actual gold to create credit and run deficits. When the investors were ready to exchange that currency to retrieve their gold, there was not enough gold in the reserves to match the outstanding dollars. Economic catastrophe followed.
With money tied to Gold, those individuals controlling currencies cannot manipulate the cash flow; therefore, they don’t like it. As usual, the hearts of men needed to work around gold so that they can cheat the natural order of the economy.
The man-made paper fiat currencies that we like holding up to our ears like a phone to take pictures on Instagram is as fake as monopoly play money.
Paper bills are currencies issued by the government made from thin air and backed by nothing. All Currencies intrinsic value derives from the faith we have in the issuing government to deliver on its promises. Do you trust the government? Today, our money is no longer tied to the gold standard due to the power players desire to print money at will and fund wars and welfare programs. With no direct connection to Gold, the supply of paper currency can be manipulated.
Once again, we are at the point in the debt cycle where the FEDs start to cut rates, print money, and buy assets. When this occurs, it kills your purchasing power, causes inflation, and will negatively impact those who save dollars. Gold is a store of value. It may not pay a yield, but it’s immune to inflation pressures.
There are many ways to invest in gold. For the long term I recommend buying real physical gold bars and coins from trusted dealers. Here are a few resources for your research.
World Gold Council https://www.gold.org/
CPM Group https://www.cpmgroup.com/
For the short term there is money to be made trading gold stocks and ETFs. I put together this watch list for you:
Shoe box money loses value as inflation eats away the value. Exchange that paper for gold(real money) and you will thank me later. Happy trading Wallstreet Jackboyz & Girlz!