Gold Is Just Shy of a Scam. Consider Seeds.
Over the years, I’ve listened to a variety of positions on precious metals. The arguments range from a “pet rock” to the “only true storage of wealth,” so where does the truth lie? Getting to the truth of this is pretty important because gold is marketed as a must have for anyone interested in being prepared. Most people have limited resources so if they are spending those finite resources on very expensive, yet useless stuff; it needs to be addressed. As such, I want to address it because I’ve come to see gold as just shy of a scam. Before I go any further though, my caveat is this isn’t investing advice. It’s merely my observations watching this element for decades while becoming relatively self-sufficient. So, why have I grown sour on gold? If you are like me, I’d like something that actually produces a profit or at least appreciates in value, helps me through good times and bad, is low risk, and ideally is liquid. By liquid, I think of things that allow me to acquire the goods and services I need. It doesn’t really matter to me if it is through trade, conversion to cash, or by producing revenue as long as at the end of the day, I have something that I can basically use as money. Using this baseline to evaluate gold, it may seem to make good sense on the surface. However, I’ve found that looks are deceiving. Before you start to hate me and delete your account, hear me out because you too may end up deciding there are better options for your situation.
Well, let’s look at what Gold is good for:
· If you are trying to preserve wealth and are in a stable country with the ability to easily liquidate gold, silver, etc. then diversifying into precious metals may make sense.
· Collecting. I don’t mean this as a joke. The numismatic value of gold coins is legitimate and if you are a serious coin collector, gold coins make sense.
· Futures and options trading gold shares versus physical gold. Again, if you are a serious trader (not investor), commodities have always offered an enticing opportunity.
· Gold is also good for you if you are a broker selling gold to retail and institutional buyers.
· Finally, gold is good for backing healthy stable currencies.
…and that’s about it. If you want to buy gold because of one of these bullet points, then gold makes sense. However, you may have noticed that you didn’t find things like “good” store of value, liquid, good investment, or something I can obtain goods and services with during rough times. You won’t find those points because gold isn’t good for those things and since those are the things I’d only be interested in buying gold for, it’s an expensive scam. Think not? Let’s look at each point.
Let’s first deal with that “good” store of value and liquidity. You can buy gold all day. During good times, plenty of people and businesses will sell you gold bullion, coins, options, futures, shares, etc. However, have you tried to sell physical gold back to anyone? I have and can tell you that you’ll take a hell of a loss because your options are generally just coin and pawn shops. For starters, when you buy gold, you are generally paying its spot price PLUS the broker’s fee, plus taxes, plus shipping and insurance. When you sell gold, you are getting a price well BELOW spot. Sure, gold may have appreciated in the time you had it, but that’s generally in proportion to the rate of currency inflation so whatever you end up getting out of it will likely have slightly less buying power than what you initially invested. It’s also worth noting that gold isn’t something you can easily ship or travel with because it is heavy, bulky, and very risky. It also sets you up for tariffs, taxes, and shakedowns. If not bad enough, have you ever tried to buy something online with gold? Obviously, that’s rhetorical. Gold doesn’t transact in any setting other than face-to-face. So, when someone tells you it is a good store of value and liquid, I spit out my beer and call them bad names.
What about gold as an investment? Well, if you bought gold in 2010, your value has roughly doubled. In fairness, you had some other buy-in opportunities up till about 2019 before inflation took off too, but you’d need to have timed it right. Doubling your value in 14 years may not sound great, but I guess it isn’t horrible either…until you look at true inflation and see how much the dollar has been devalued. Then it’s a wash. As previously mentioned, the value of gold adjusts in relation to the dollar and really only goes up when the dollar is devalued. As such, it may be a store of value, but not one that even breaks even and it certainly doesn’t grow in real value, leaving you with a poor investment. Still though, isn’t that better than a lot of stocks on the market? This question opens pandora’s box. Gold “gaining” value is better than stocks that lost value, that much is true. It also did better than poorly performing stocks. However, that logic misdirects you from the bigger point, which is the stock market is a scam and bad investment too. If you compared gold’s value growth to a truly good investment, the contrast would be stark. Only by comparing gold to even worse “stock market” investments does gold as an investment seem to make good sense. For more information on the great stock market scam, see my Substack post: Boycotting for Real Results. You may ask what a good investment is, and my answer is you should start with something that produces real products or services of value. For example, let’s say you have $10,000 in cash you want to invest. You could buy 4 gold coins and sit on it for roughly 15 years and have $20,000. On the other hand, you could buy an acre of raw land, which if you just sat on it for 15 years, probably appreciated to north of $30,000 for the same acre. Then, over the next 15 years, you could cut the timber and sell that for lumber and firewood, plant a garden and sell the produce, landscape it to add value, develop it to add even more value, and/or even rent a portion of it for some use as passive income. At the end of year one, you probably paid for the land just in timber and land improvements. Then, each year you could easily grow and sell a couple thousand dollars in produce, which double as a real trade commodity in hard times. If things go well though, you could put a little cabin on it or make it a parking lot or whatever and add significantly more value. The point isn’t what you do with it. The point is that there are plenty of better investments than gold that pay you dividends in good times and bad. For 15 years gold just sat there doing nothing. During that same period, the land fed you (produce), warmed you (firewood), sheltered you (lumber), and enriched you (true value appreciation due to increasing scarcity) through good times and bad. Heck, if you want to really go to the extreme, invest $10 in a variety of heirloom seeds. Those seeds could easily grow $1000+ in produce annually…actually much more, feed you, and even be used as highly desirable barter in tough times. Further, some of the produce can be used for seed to plant even more crops. As such, in just the first year, you didn’t double your money, you 1000x it! With this, I hope we can put to bed the notion that gold is anything other than a waste of money as an investment.
Well, what about when the economy collapses or after some disaster? Isn’t that when gold really shines? Again, the answer is no. In extreme times, some people may accept gold, but it will be for pennies on the dollar. For example, a man with a bucket of apples may give you some for a 1-ounce gold coin that cost you $2500 in today’s money. Further, don’t expect anyone to make change. However, what is far more likely is the guy will look at it, say it’s fake, and then ask what the hell he’d do with it. You can’t eat it, you can’t drink it, and it doesn’t provide you with shelter or security. If anything, it weighs you down and makes you a target for thieves. None of these factors make gold desirable in rough times. As such, gold is neither a good store of wealth nor liquid.
There you have it folks. Gold is marketed to you mainly as a hedge, as a store of wealth, as a prep for bad times, and even as an investment to fools, but doesn’t actually perform well for any of those uses. As such, I see it as a scam. Gold only profits the money handlers, who need suckers to buy their shiny objects and that’s exactly why it is so heavily marketed to you. If after this, you still want to have a bit of gold and silver, sure, but only after your other preps and investments are in good order. Gold and precious metals should never be your primary default when it comes to storing wealth, growing wealth, or weathering rough times. Then, if you do, consider coins with true collector value…something gold is actually good for. If you shop around, you can find some bargain undervalued coins that do have intrinsic value due to their scarcity and demand. All said, I hope today’s Substack gave you some valuable perspective when it comes to building sustainable wealth and help sorting out the hollow claims. I don’t want you to waste your hard-earned money and want each of you set up for success. So, go buy yourself some seeds and invest in something with real value.
Till next time,
D.t.Y.