In 1946, when the Foundation for Economic Education was founded, gold was trading at about $38.25 per ounce. This week, it was trading above $2,000!
I can only imagine how much money could have been made from previous investments in gold. I wish I had invested my extra Christmas or birthday money into the precious metal in 2000, when gold cost about $280 an ounce goldco reviews.
Although there are no guarantees in any investment, it is clear that we are entering a period of great economic uncertainty. In recent economic news, several banks and large financial institutions have filed for bankruptcy, leading to what is likely to be a period of recession. The US dollar is losing significant value caused in part by monetary inflation, excessive spending and fading market confidence. Some economists speculate that the US will consider a centrally controlled, government-issued cryptocurrency as a means to promote Modern Monetary Theory.
Gold stands the test of time
Throughout history, as fiat currencies have faded, gold has stood the test of time time and time again, and there are reasons for that.
“Commodities like gold and silver have a global market that transcends national borders, politics, religions, and races,” writes Robert T. Kiyosaki, author of Rich Dad, Poor Dad. “A person may not like another’s religion, but he will accept his.”
Buying gold or even holding it was not always an option for Americans. As FEE President Emeritus Lawrence W. Reed has noted, “…on April 5, 1933, FDR told Americans – in the form of Executive Order 6102 – that they had less than a month to hand over their gold coins, gold bars and certificates or face up to ten years in prison or a fine of $10,000, or both.
Against the currency monopoly
This essentially made private ownership of gold illegal from 1933 until December 31, 1974, when the executive order was rescinded. These laws negatively affected the American economy, markets, and the dollar, and in many ways continue to affect the United States and the world today. As economist FA Hayek suggested, the US government was monopolizing the currency, while debasing it, expanding social programs, and financing them through fiat monetary inflation schemes.
Although there is no way to undo the past, we can take advantage of the future, and gold can be a great way to do so. Here are five reasons to consider investing in gold if you’re starting a portfolio or looking to diversify.
1) Gold maintains its value over time
Although the short-term volatility of gold is concerning compared to the US dollar, long-term investment in physical gold has maintained its value throughout history. If you look at 1946, the value of an ounce of gold was around $38.25. Today, in 2023, the value of an ounce of gold is steadily rising above $1,900 to reach the $2,000 range. Even 10 years ago, an ounce of gold was around $1,400.
Considering gold for long-term investment is a great way to protect yourself against inflation and the collapse of fiat dollars rather than storing your hard-earned money in a savings account where it earns virtually no interest, even as inflation erodes your purchasing power.
2) Gold is easy to trade
The value of gold is almost universal: it is appreciated throughout the world and has maintained its value over time. This international and cross-cultural appeal of gold makes it relatively easy to buy and sell around the world, unlike many other investments. When there are government policies that control bank accounts, supervise stock trading, restrict sending or receiving digital funds, limit lines of credit, close credit cards, devalue currencies, and regulate crypto transactions, holding physical gold remains normally being a viable option for trade. This is seen very often in periods of inflation, deflation and war.
If you are interested in purchasing gold, but don’t have an extra $2,000 to drop on an ounce of gold, there are a few other ways to invest without having to purchase a full physical ounce.
Here are some ways to get started:
Gold Mining Stocks Exchange
Traded Funds (ETFs) and Mutual Funds
3) Gold is low maintenance
Unlike many other investments, gold has a historical and logical propensity to increase in value over time on its own. Stocks may offer a higher average rate of return, but with gold you don’t have to look at a computer day after day to decide when to buy and sell. You don’t have to research company financials or listen to earnings reports as intensely.
Of course, it is usually best to buy low and sell more expensive than what you originally paid. However, it’s also likely that whatever price you pay for gold today, 10, 15, or 20 years from now it will be worth much more, making it a low-maintenance investment.
Another great practical aspect of gold is its natural low-maintenance characteristics of durability, imperishability, while it also has a wide range of industrial uses.
4) Gold is a path to generational wealth
When you own physical pieces of gold – whether in the form of coins or bars or another physical form – they can be transferred between people without necessarily involving the government. When gold is bought or sold, there may be times when a tax is applied. However, when gold is given as a physical gift or as an inheritance, simply to be kept rather than sold for a profit, you will likely be able to keep it tax-free up to a certain amount.
Having gold can help transfer wealth between generations. Some cultures melt and mold gold into basic styles of wearable jewelry, coins, ornaments, or cutlery, to further aid in this transfer process.
5) Gold inspires competition
Economist Henry Hazlitt agreed with FA Hayek that the existence of competitive currencies helps combat inflation, while giving free people more options to choose from. Competition and options are not given to people who are not free from state monopolization of currency. If more people invest in gold, it is likely to inspire progressively greater competition for the US dollar and other world currencies. Monetary competition puts pressure on governments to reliably maintain their value in the face of monetary inflation and price inflation rates.