Wealth Preservation with Gold

Suppose a hundred years ago some far-sighted benefactor, someone a few generations back, wanted to leave some wealth for their descendants – including you.  Would you be better off if they left you $10,000 cash in bills or $10,000 in gold?

A hundred years ago American money was gold. Americans commonly carried and conducted commerce in $20 gold pieces.  They were the coins of the realm.  But if you thought carrying them around – especially in great quantities – was inconvenient, you could use paper money.  A US $20 note issued by the Treasury was just a claim check or a warehouse receipt for gold.  If you wanted to, you could walk into any bank or go to the Treasury and exchange that paper $20 note for real gold.  No questions asked.

So your benefactor would have had a choice.  Which would you have wanted then to leave, paper or gold?

You probably don’t have to think about it too hard.  The US paper dollar has lost about 95 percent of its purchasing power since 1924.  

Someone naïve argued about that with us once.  “That’s impossible,” he said.  But figure it out for yourself.  Inflation officially reduced the dollar’s purchasing power by 3.4 percent last year.  It reduced it by 6.5 percent in 2022. And so on, year in and year out.

Here’s a shortcut.  Consumer prices are up about 20 percent since Biden was sworn in.  That means today’s dollar only retains 80 percent of the purchasing power it had in January 2021.

Add in more than a few years of year-after-year inflation along the way, and soon you will find that the loss of purchasing power really adds up!

If a thief broke into your bank account and stole 3.4 percent of it last year and 6.5 percent of it the year before and has been stealing from it every year of your lifetime, you might be upset.  You might call the authorities.  But there is no point in calling the authorities on what is happening to the dollar because it is the authorities who are doing it!

The $20 gold piece contained just a little less than an ounce of gold, at exactly .9675 ounces. Based on a recent gold price of $2,350, just the gold content of a $20 gold piece would be $2,274 ($2,350 x .9675 = $2,274).

So the price of gold has increased close to 113 times ($20 x 89 = 2260)!  Think about that in percentage terms.  Your gold has increased by 11,300 percent!  That’s an average of 113 percent a year!

(The story is even better than that because, thanks to their rarity, desirability, and for other reasons, investors and collectors prize those beautiful U.S. gold coins beyond just their gold content.  Ask your Republic Monetary Exchange gold and silver professional about this.)

As for the paper money?  Well, it lost most of its purchasing power.  That is the common fate of unbacked paper money throughout time.

So by now, even if you had never thought about our question before, you will have doubtlessly concluded that you would have wanted your would-be benefactor a hundred years ago to leave you real gold instead of paper money.  

Our story says something about real money and wealth preservation in this day and age. 

That’s only part of the story, that honest precious metal currencies hold their value.  So with the clear interest that the people have in a reliable form of money that holds its value, why do governments hate gold and silver money?  Why is it that the more dishonest and corrupt they are, the quicker they turn to printed or digitally printed money?

That, as they say, is the rest of the story.  We’ll write more about that one of these days, but if you’d like to cut to the chase and get the answer to that and your other questions about wealth preservation, speak with a Republic Monetary Exchange precious metals advisor today!