the benefits of gold

There are countless reasons why millions of people around the world desire and purchase gold.  About 45% of the yearly demand for gold comes from jewelry purchases.  Both China and India, representing over one-third of the world's population have continued a centuries old love affair with gold as a key element of their cultures.  

Central Banks around the world own approximately 20% of all the existing gold supply.  Over the last several years Central Banks have increased their gold purchases to the highest level in over 50 years!  Recently, gold was elevated to the highest level Tier One category as a financial asset, reaffirming it’s role as a safe haven with high liquidity.  Annual Central Bank demand is currently running at about 23% of supply. 

Investment demand accounts for 24% of annual gold supplies.  New investment demand is starting to explode globally as vast populations continue to see the world’s reserve currency, the dollar, decline in purchasing power.  In addition, many other nations’ currencies are declining in value at an even faster rate than the dollar as governments continue to spend and compile mountains of new debt. 

WHY IS GOLD INTEREST SURGING? 

Gallup has measured Americans’ perception of the best long-term investment among five options (stocks, bonds, mutual funds, real estate, and gold) since 2011 as part of it’s Economy and Personal Finance poll. 

Although falling sharply from the previous year, 34% of Americans chose real estate as the favorite long-term investment.  A big surprise to many was the strong surge of gold, almost doubling to 26% and overtaking stocks and mutual funds as the second most favorable investment. 

A study conducted by State Street Global Advisors has found out that Generation Y, also known as the Millennials, are significantly more committed to gold than the prior two generations, Gen X, and the Baby Boomers. 

According to the study, Millennials hold 70% more gold than the two previous generations, with 17% of their total investment portfolios in gold.  In addition, 67% plan to significantly increase their position in gold holdings.  

THREE KEY BENEFITS OF PHYSICAL GOLD

Although there are numerous reasons to own physical gold, (see 44 Reasons for Physical Gold), three of the core benefits of owning physical gold are wealth protection, privacy and profits. 

Protection of Purchasing Power- In 1924, a man could purchase a custom tailored 3pc suit for a twenty-dollar bill or a $20 gold coin, which contained about an ounce of gold.  Fast forward one hundred years to 2024 and a $20 bill will barely purchase a cheap necktie, however, an ounce of gold, with a current value of over $2,000, will purchase two custom made suits. 

One of the reasons wealthy people have continued to own gold is not necessarily to increase their wealth, but to protect the wealth they have from loss of purchasing power. 

On a long-term basis no other liquid asset has a track record of protecting assets like gold.  For over 4,000 years, both kings and the common people have held gold as a form of financial insurance policy.  In a sense, gold is the oldest insurance policy not written in paper. 

Privacy-  We live in an age when virtually every asset we own has been recorded in the database of some corporation, bank, or government entity.  Our Constitution guarantees our right to privacy, however, most Americans' assets can be freely or easily discovered by a few simple clicks on the computer.  Financial theft through a maze of global scam professionals has robbed billions of dollars from innocent and unprotected Americans. 

Following the terror attack of 9/11, Wall Street closed its doors temporarily, blocking every investors access to their private accounts.  What would happen if God forbid, a more menacing attack, such as an enemy EMP assault took place in the United States, shutting down vast electric grids, internet access and essentially closing all access to bank and other funds? 

Recently, the government of Canada froze the bank accounts of conservative peaceful protesters and their donors as a form of punishment for their “right-leaning” views.  Could that form of government overreach ever happen in the U.S.?? 

Having a readily available and very private store of physical gold or silver gives citizens options that are irreplaceable in a time of financial or political intrusion.  Owning an asset which is “outside the system” is not only wise, but it may also be lifesaving for yourself or loved ones.  Gold and silver are the ultimate method of holding physical wealth privately. 

Profits-  In 1971, President Richard Nixon severed all ties of gold backing to the U.S. dollar and the value of gold was allowed to float in a free global market, without any government price controls. The price of gold on the date of Nixon's suspension of gold convertibility was $43 an ounce vs. the S&P 500 was at 99.  Since August 1971 until present (March, 2024), both the price of gold and the S&P have increased in value the same 51X.  

From the start of the new millennium in 2000 until 2024 gold has outperformed the S&P and DJIA by over a two to one margin.  An investment of $10,000 in stocks would have grown to a respectable $38,000 during the 24-year period.  An identical investment of $10,000 in gold would now be worth over $75,000! 

As long as the U.S. debt and dollar production keep increasing at the current rate this trend of rising gold prices should continue far into the future.   

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