When it comes to saving for the future, you want to make sure that all your eggs are not in the same basket. Hopefully by time you’re finished reading this article you will be able to answer the question, “Are all your eggs in one basket?”
In August 2008 I attended a briefing given by a man that would go on to manage $800 million dollars of Bill Gates money. He told everyone in the room that there were two things that you could invest in, PAPER and EARTH.
Paper is anything man-made, and earth is anything that comes out of the earth.
Man-made investment products are IRAs, 401ks, TSPs, stocks, bonds, mutual funds, I think you get the picture.
He told us that anything man-made is tied to the U.S. dollar, and if the dollar fails, so will your investments.
Once upon a time this type of thinking was unheard of, but the 2008 U.S. Housing Bubble burst made those of retirement age think differently.
He told the audience this right after the U.S. Housing Bubble had burst and things were taking a turn for the worst.
His advice was to not to listen to the so called experts, especially the ones we see on television. He said that they only recommended products from the paper group because that’s what makes them the most amount of money.
He also said that investments go in a cycle, and each cycle lasts about 18 years. At the time he said that we were in about year 7 to 9 of the earth phase. Over the next three years gold would go from about $700 an ounce to a high of a little over $1900 an ounce.
The price dropped down to a low of about $1100 an ounce, but has made a little rebound after Great Britain decided to leave the European Union.
Why the rebound in the price of Gold?
Investors wanted their money to be in a safe place where they could store their wealth.
There was about $2.1 trillion dollars in wealth transfer that occurred over the following days. Money is never lost, it is transferred and the financial vehicle most of that $2.1 trillion was transferred to was gold.
Gold has slowed its ascent because the stock market has seemed to have rebounded.
Here is what one smart investor had to say when asked “Why does Wall Street Consistently Profit?”
His answer was “because they sell to people who don’t really know how the markets work.”
I subscribe to one of the top Financial Newsletters and read an article the other day titled “The huge mistake you’re making with gold today.”
The article talks about the correction that gold has made, and the gains in corporate stocks and a few other things that would help explain why everyone has jumped back on the stock buying bandwagon.
The writer goes on to say that we should not get swept up into the “fickle beliefs of the everyday investor” because the world’s economic problems did not magically disappear because of a rising stock market.
Here’s an excerpt of that article:
“Here’s the thing… You can count on individual investors to do exactly the wrong thing at the wrong time. People are emotional. They get swept up in the hype as stocks rise, buying near the top… And they sell in despair after market crashes – buying high and selling low.”
The writer is correct, we buy on emotion and justify with logic even when that logic should be telling us to do the opposite of what we’re about to do or have done.
He goes on to recommend that if we haven’t been buying gold stocks, now is the time because they are cheaper and you can get more for your money.
This is the type of thinking that the Financial Expert that went on to manage $800 million of Bill Gates money was talking about.
Buy more stocks, in this case, a great recommendation by the analyst that wrote the article, but telling us to buy more stocks instead of physical gold.
When gold is cheap you want to increase your ownership of physical gold and not a paper asset that represents gold.
It’s because there is a mindset with the everyday investor that he or she cannot afford physical gold because of the cost associated with buying it by the ounce or in large enough quantities to make a difference in long term investing goals.
That was true in the past, but today everyone that wants to own physical gold can do so. If you would like to know how you can start acquiring physical gold without paying the high price associated with buying it by the ounce, click the link below:
Why Invest in Gold or Exchange Your Cash for Gold?
There are several characteristics that money possesses, and those may change depending upon who you are talking to, but here are several of those characteristics:
- Limited Supply
The only characteristic that money (the paper currency that you have in your possession) does not possess is that is not a store of value or wealth.
Store of Value – a store of value is any form of wealth that maintains its value without depreciation.
Precious metals such as gold are a good store of value because their shelf lives are perpetual.
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Hopefully all of you eggs are not in one basket. I also hope that this article has inspired you to conduct your own research and that it will be able to help you honestly answer the question “Are all your eggs in one basket?”