Those of you who have been listening to me for a while know that I am not really a precious metals guy.
I know the arguments and I respect them. Gold has held its price over an unprecedented amount of time.
An ounce of gold got a guy a nice toga and sandals in Roman times and today it will get you a nice suit and a pair of shoes.
In that regard, gold has been the ultimate hedge if you are looking for wealth preservation over a thousand years.
And that’s what people selling you gold will tell you. They aren’t lying but there is often an element of fearmongering involved in that world that I find distasteful.
The thing that I don’t really like about gold is that it is an asset that doesn’t throw off any money. And if you are storing it somewhere it’s going to cost you money to do so—kind of like real estate that has negative cash flow.
With negative cash flow, leverage doesn’t make sense either—not like it’s available on gold anyway.
So I guess my perspective is if you want a real asset that is hedged against the dollar and keeps up with inflation, why not buy real estate?
In fact, if you don’t put any leverage on the real estate it’s pretty much behaving like gold but giving you an income as well.
I remember Dante Andrade and I looking for properties for Touro and seeing Chinese buying $30-40 million dollar assets for cash. They were essentially buying a storage of value outside of China. Kind of sounds like gold, right? Except the real estate cashflowed of course.
Anyway, today I’m not anti-gold by any means. I’m just not a gold bug.
As for other precious metals, they often have more utility than gold so that certainly is an appealing quality. Silver, for example, is used in several industrial applications.
In that sense, there may be some additional value there that could lead to price increases in the future.
I’m certainly not an expert in this area though. That being said, personal finance is personal and you should hear the argument for all types of assets and make your own decision.
My guest this week is an expert on silver and makes a pretty interesting case for why you might want to add some to your portfolio.
Make sure to tune in!
P.S. Later this week, look for another podcast as part of our “back to school series”!
Michael DiRienzo is the Executive Director at The Silver Institute.