There are four major obstacles to wealth creation in this country—deflation, inflation, market risk and taxation. Get caught by any one of these obstacles and you severely impede your ability to keep what you’ve got and make your money grow.
Avoiding the taxman is essential if you want to have a financially-secure retirement. You can do this by owning gold, platinum and silver bullion.
Under normal circumstances, physical gold, platinum and silver attract tax when you sell them at a profit. Only 50 percent of your profits are reportable for tax purposes. In addition, physical gold, platinum and silver do not generate income such as capital gain dividends, dividend dividends and interest. Gold, platinum and silver bullion are tax-efficient assets.
Deflation is a nightmare to most economists. This is because deflation is a very difficult beast to tame once it takes hold. Deflation occurs when there is a dramatic decline in the quantity of money that leads to a decrease in the price and value of goods and services. Cases of severe deflations can lead to economic collapse and massive unemployment as was the case in the 1930’s.
In this environment most forms of investment growth will have stopped, making it difficult for people to make their money grow. Couple this with the fact that the average North American deflation spiral lasted 21.3 years and you can appreciate why economists believe deflation has to be fought and defeated at all costs.
If you owned an appropriate amount of gold, platinum and silver bullion over this 21.3 year period, your purchasing power would have increased as prices continued to fall. This is due to the long-term price stability of precious metalsbullion.
The story is the same for inflation. When too many consumer and government dollars are chasing too few readily-available goods and services you get inflation. During an inflationary spiral goods and services cost more to buy. Without a corresponding increase in income for consumers and government inflation can lead to economic chaos as well.
During the great inflation spiral of 1951-1979 prices of goods and services jumped a remarkable 158 per cent. The purchasing power of gold and silver, however, jumped 240 percent and 380 percent, respectively. This favourable statistic is due to the long-term earning power of precious metals bullion.
Any financial advisor who has seen the dollar value of his or her book melt away knows what market risk is all about and what it can do. Mutual fund investors know what can happen, too, especially if they sat back and watched their investment portfolios sail over the market precipices of 1987 and 2000.
Market risk is a combination of general market volatility and securities price variability. They are inherent to today’s investment markets and every financial advisor and mutual fund investor is exposed to market risk to one degree or another.
During severe market downturns, the price, value, purchasing power and growth potential of a mutual fund portfolio drops. Where a market decline is severe enough, it can drag the economy and everything in it into an economic slump. This can ruin the value of your accumulated wealth and prevent you from accumulating sufficient retirement wealth in future.
But, adding sufficient amounts of gold, platinum and silver bullion to your investment mix adds tremendous capital preservation and huge growth potential over the long term. This is because gold, platinum and silver bullion are negatively correlated to almost every alternative asset-class.
In this regard, gold, platinum and silver bullion represent a distinct asset class and allows investors to maximize investment diversification.
The characteristic price stability of gold, platinum and silver bullion helps mitigate the characteristic variability and volatility of investment markets. The benefit, of course, is capital preservation.
Adding gold, platinum and silver bullion to your mutual fund portfolio is a particularly good move if you want to preserve the purchasing power of your nest egg during long periods of acute economic deflation and inflation.
As some of you know, I’ve argued on more than one occasion that investors should buy The Millennium BullionFund (www.bmsinc.ca) and hold it for the long term. All of my arguments, I believe, are sound.
But, it wasn’t until I got my mitts on and studied a long-out-of-print copy of The Golden Constant by Roy W. Jastram that I fully realized why fund founder Nick Barisheff created The Millennium BullionFund and why every investor should own units of this fund, now.
Like Jastrow before him, Barisheff discovered that there is a special functional symmetry between gold, platinum and silver bullion. While each precious metal displays distinct physical characteristics, together they provide tremendous hedging, wealth preservation and diversification benefits over asset-classes such as bonds, cash equivalents, real estate and stocks.
Of course, let’s not forget future growth potential. While precious metals bullion is adept at helping you keep the value of the wealth you’ve accumulated, gold, platinum and silver bullion offer exceptional growth potential, too.
During the last great commodities boom of 1971-1980, the price of platinum grew 800 percent, the price of gold jumped a remarkable 2,300 percent, and silver’s price rocketed an astounding 2,400 percent!
Let’s see now. If I had invested $25,000 in each precious metal in 1971 my investment would have grown to $1,375,000 in less than 10 years. No wonder informed investors call precious metals bullion a life-long investment companion.
Got gold, platinum and silver? I do. And so should you.
Stephen Gadsden is a leading author, researcher and writer. His work encompasses a wide range of topics in business, economics, environment, history, philosophy, science and society. For details visit IWN Communications at www.iwncom.ca.
