How does gold and silver preserve a persons wealth?

Jerry Wagner, founder and president of Flexible Plan Investments LTD., agrees with Penzo. In 2013, he launched the first and only registered mutual fund offering exposure to gold bullion and argues that a “20 percent allocation to gold is the appropriate exposure for a traditional portfolio of 60 percent stocks and 40 percent bonds.”

So you can now see that there exists a large, but not too large, and almost fixed quantity of gold in the world, almost all of which is held by its owners as a tangible store of wealth. That is something which is true of nothing else.

Gold’s price fluctuates, but its value is timeless. Consider how gold will preserve your purchasing power over the next, say, five years compared to your currency. All paper currencies, by their very nature, lose value over time. The dollars you save in your bank or brokerage account will continue to seep purchasing power.

There’s another advantage to gold being a tangible asset: it can’t be hacked or erased. Unlike brokerage accounts, bank accounts and payment services like credit cards, gold bullion is out of reach from hackers and identity thieves. Even if the 1’s and 0’s that were used to create your account are deleted from existence, your gold will be safe and sound.

India’s infatuation with gold has been there for a long time and over the years it has only grown stronger. No wonder, Indians consume the most gold globally. Real estate and gold make up almost two-thirds of Indian household savings. For Indians, gold is considered more than an investment. Hence, it has found a significant place in their homes.

As I see it, deflation is not in the cards. Deflation would make the existing US debt problem even worse, and so the Fed will never let that happen. If they have to print a quadrillion dollars to stave it off, they will. Of course, that comes with its own set of problems.

For the record, lest anybody get confused, the monetary value of a bullion coin is determined by the weight of each metal in the coin — not its fineness. (Numismatic coins can be a different story.) All American Gold Eagles contain 1 full troy ounce of gold — the same amount as a Maple Leaf, Kangaroo, Panda or Krugerand — plus a little silver and copper for added durability. Folks who are interested in an American .999 fine gold coin can buy American Buffalos, which are 1 troy ounce of pure unadulterated gold. Of course, being pure gold, they are softer and subject to being more easily scratched and dented. I own both types of coins, but I prefer the Eagles.

Think about it for a moment and you’ll see that given a choice of spending good money (gold) or bad money (inflating paper) you’d spend the paper and keep the gold as a store of value. So in an economy where economic and political considerations have combined to produce a paper currency running in parallel with gold, and where that currency is showing the early signs of being dangerously expanded in supply, then people will elect to hold on to gold and spend paper. Magnified millions of times by everyday transactions in a typical economy this eventually stops gold circulating as money.