When it comes to your investments, diversification hasn’t worked. The “Buy and hold” strategy has become “buy and hope.” The one asset that could have helped stabilize your portfolio isn’t ever recommended by CNBC or your financial advisor. That asset is gold.
One cannot rely on CNBC or conventional financial media advice as they are misinformed.
Continually CNBC bashes gold as gold is the enemy in their book. They’d rather you put your trust in assets that don’t counteract the fall of the U.S. dollar. How has that worked for investors the last 10 years? Not well.
It’s not your fault you’ve lost money on your investments but you’re not being told the whole truth about investing to begin with and things unfortunately are worse than you may think.
We have experienced in 2008 and 2009 a horrendous Global stock market downward spiral and the U.S. stock market hadn’t seen this type of decline since the great depression. While nothing goes straight down, and bounces like we’re experiencing now will and do occur, those bounces will only be followed by further declines for the time being.
Governments have made it so we don’t know much about investing in gold.
The U.S. Government hides from us how much gold is stored in Fort Knox and won’t even let us audit it. Why the secrecy? Every Central Bank in the world owns gold, so you’d think governments would advertise this fact so their citizens would have a stronger belief that their paper currency has some sort of gold backing, especially with the recent rise in the price of gold.
Gold used to back our currency, but for the last 38 years it has not. What really backs our currency? The answer is the full faith and debt of the U.S. government. The dollar has lost 81% of its purchasing power in those 38 years. What cost $1 in 1971 costs $5.31 today for that same item.
Gold used to be the money of our forefathers. Today, if they were alive, they’d demand their portraits be removed from the currency as it does not subscribe to the definition of money they laid out in the Constitution.
Ignorance of how gold fits into ones understanding of money or even how to include gold as part of a diversified portfolio is not your fault either. It’s one of the dirty secrets you’re better off not knowing about. That is, unless you want to protect your wealth from confiscation through the coming tsunami of inflation.
The hottest market in the last 10 years and your financial advisor had the opportunity to put you into gold but they didn’t do it.
You see, financial advisor’s aren’t taught anything about gold as a viable investment except that it is a commodity and sits atop the pyramid of investments at the highest risk level while the U.S. Dollar sits at the bottom “safe” level. Hmmm, hasn’t the dollar lost about 25% in value the last five years?
Many financial advisers are really clueless about gold because even their Certified Financial Planner (CFP) textbooks don’t explain gold well. I bought and paid for the entire CFP course and received all the books in advance. The book for the investment class, “Investments: An Introduction” Seventh Edition by Herbert B. Mayo (Custom Edition: College for Financial Planning), had six pages devoted to gold, almost all of which bashed gold as an investment relating it to” jewelry” and “numismatic coins.” The book called buyers of gold, “collectors” and didn’t even mention U.S. Gold Eagle coins or the U.S. Mint.
So the next time you see your financial adviser (CPA, Insurance Agent, Psychic or whomever is advising you on where to invest), show them the table below and ask them why they didn’t have you diversified into gold the last 5-10 years and why they aren’t recommending you insure the continuous decline of the U.S. dollar with an investment in gold today.
And remember one important fact; if your portfolio goes up 10% and the U.S. dollar falls 10%, you haven’t gained any true wealth.
Diversification into gold can help counteract the decline in the U.S. dollar and maintain your wealth.
In a future article I will be discussing more reasons to diversify into gold.
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| YEAR END | PRICE OF GOLD |
| 2000 | $273.60 |
| 2001 | $279.00 |
| 2002 | $348.20 |
| 2003 | $416.10 |
| 2004 | $438.40 |
| 2005 | $518.90 |
| 2006 | $638.00 |
| 2007 | $838.00 |
| 2008 | $885.50 |
| 2009 | $1,992.00 |
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