I bought my first precious metal back in 2016. It was several 1 ounce silver bars and I remember receiving the package and holding them in my hand. It was surreal and the first time I’d ever held something that I knew was valuable in and of itself. I instantly understood this was real money and I made plans to begin investing in more.
Today, I have a very large percentage of my net worth in gold. So why is this titled “The Case Against Gold”? Well because right now gold is an asset that the general public hardly owns. A case has been made against it and most people listened and now no longer own it and almost believe it laughable. I believe this case against gold is illogical and I intend to show you why.
Now to really understand this, you need to understand my background. I’m not a “gold bug” who things we’re going into a global apocalypse and that we should all live in underground bunkers with gold and eat algae for the rest of our lives. In 2012 I became a licensed financial advisor. I was selling Wall Street Investment Products and was very anti-gold. I’d laugh at you if you told me you owned gold because I thought you were crazy. Common remarks of mine would have been things like “why would you overpay for a shiny rock?”, “gold doesn’t produce anything”, “gold only grows based on fear”, “good luck paying for your groceries with a piece of metal”, and other such ignorant one-liners.
What did I learn that changed? Well, for one, I learned how the Federal Reserve Bank really works. That’s a whole other topic we can dive into, but essentially I learned that in 1913 our country instated a privately owned corporation, built and run by the wealthiest bankers on the planet to control the U.S. dollar supply and interest rates and that because of that, almost every economic crash, war, famine, or other large scale catastrophe has in some way been tied to this private corporation. I also learned that our dollars used to be backed by gold and after 1971 no longer were and that this private corporation uses a system of loaning money to our government at interest and being paid back with income tax, which meant I was nothing more than a financial slave in the game of the super wealthy.
When I began to research this Federal Reserve Bank I learned something else. They own most of the gold in the world. At current, the United States Federal Reserve Bank owns over 8,000 tonnes of gold and it makes up almost 80% of their total reserves. A tonne is 2204.62 lbs. So I did the math and realized that the Federal Reserve Bank owns over $33 billion worth of gold.
Not only did I find that they own the most gold, but they also still buy the most gold. In 2019 alone they bought over 650 tonnes worth of gold.
Why does this matter? Because the Federal Reserve Bank was a key player in eradicating the gold standard. Our dollar was backed by gold and they were instrumental in removing us from the gold standard. Now our dollar is backed by nothing except the full faith and credit of the United States Government…who borrows their money from the Federal Reserve Bank…who creates it out of thin air.
So we have an organization that distributes paper currency and preaches that it has value and that we don’t need gold to back it any longer, but in the same breath this same organization is the largest buyer and owner of gold? Something didn’t add up. So I began to study gold itself.
I learned that gold has been used as a currency for 5–6,000 years now. A currency means that people exchanged with it like we do with dollars. It didn’t take me too long to then learn that gold and silver are the only currencies every in existence that haven’t failed and are still around today. Every single country, empire, and economy had a currency at one point since the history of man. And every single one of those countries, empires, and economies failed and is no longer around today. Gold is.
Gold is a metal that actually comes from outer space, arrives on meteors, and cannot be created by man without nuclear means which are so expensive that it makes no economic sense to do. Gold has been around as an element for millions, if not billions or trillions of year and outdates man. Human beings instantly recognized the rarity and value of gold and ever since it has been used as currency, as jewelry, and as a status symbol of wealth and royalty.
In fact, back in 1912 the banking mogul himself, J.P. Morgan, stated “Money is gold and nothing else. If a man had credit and I had the money (gold), his customer would be badly off.” In other words, gold has value and at that time, the U.S. Dollar was backed by gold. So it had intrinsic value. If someone had credit (borrowed money), but J.P. had the gold backing the monetary value of that borrowed money, the borrower and the customers of the borrower would be bad off because they’d own nothing and owe J.P. who himself owned their incomes in the form of debt repayment and the gold the backed the value of their money. Well this is what literally happens today and is how our economy works.
Only 12% of Americans even own gold and at this point even if we redistributed all of it there’s only enough in existence for every to own 2%. As we discussed earlier the Federal Reserve Bank has almost 80% of their reserves in gold and keeps buying more. 100% of Americans do own paper dollars. Paper dollars are credit (do some research on how our currency works and you’ll see that cash is really debt). So the Federal Reserve Bank owns $33 billion worth of gold and issues paper dollars to the U.S. Government in the form of loans. The Federal Reserve Bank owns the gold. The United States Government borrows money from them on credit. According to J.P. Morgan, this means that the United States Government and its customers (citizens) are badly off.
How do we reverse the equation? Here’s what I discovered. I need to be the one owning the gold and issuing the loans. By owning gold I own real value. Gold is gold no matter what the economy is doing and no matter what country I’m in. I could be in the jungles of the Amazon with a native tribe that was undiscovered by the rest of the world with no way to communicate with them and if I showed them a brick of gold their eyes would grow wide and they’d deem it valuable. We just know.
But Jerry, why does the price go up and down then? Because it’s measured in U.S. Dollars. U.S. Dollars don’t dictate the value of an ounce of gold. In math we learned about something called the numerator and the denominator. A numerator is the number in a fraction that we are going to divide by another number. How many dollars fit into an ounce of gold? We’re dividing gold by dollars. Gold is the numerator. The denominator is the number we are dividing the numerator by. How many dollars fit into an ounce of gold? The dollars are the denominator. Why are we doing math? Because gold is the thing being divided. You could divide gold by anything. Bails of hay, pounds of flour, bags of corn, gallons of gas, or even green pieces of currency. Just because we divide gold by another thing doesn’t mean it changed the value of gold. Here’s what I mean. If we divide 3 (numerator) by 5 (denominator), it does not change the value of 3. It just means there are only .60 5’s in a 3. But a 3 is still a 3. The equation doesn’t change the value of what’s being equated. So an ounce of gold is the numerator and it can be divided by dollars as the denominator, but it doesn’t change the fact that an ounce of gold is still an ounce of gold. Gold is measured in ounces and grams. Not dollars. It trades in dollars, but that just means it takes more or less dollars to purchase an ounce of gold. Which really means the dollars are worth more or less, not that 1 ounce of gold is less valuable than it was or more valuable than it was a year ago.
Gold is a constant. Dollars are a variable. Therefore when the “price of gold” fluctuates it is not because the value of gold fluctuated it is because the buying power of the dollar in relation to gold fluctuated. This is key to understand.
So let’s say we understand all of this and want to buy some gold. What are we going to do with it?
For me, I don’t trade gold. I buy it and hold it forever. It is an asset I want to own. Entire empires have been and still are built on gold. Study history and you’ll see the ruling class owned all the gold. It’s no different today. So I want to own gold and not get rid of it.
In a best case scenario, I’m going to own it and borrow against it. Yes that’s right, you can borrow against gold. Banks do it all the time. It’s called a collateral loan. Let’s say I own $100,000 worth of gold. Well I can borrow $75,000 of it and still get the entire growth of the $100,000. The $75,000 I borrowed I can then invest in real estate and earn passive income. Now I’ve got $100,000 worth of gold growing for me and I’m also earning passive income on the same money that I’ve borrowed.
Worst case scenario, I’m going to store it in secure, valued offshore storage in a country that values my rights and privacy. So if an economic collapse does happen and the United States Government becomes tyrannical or is overthrown by an enemy I can leave and go enjoy my life and my wealth somewhere else entirely with no worries. I’m probably not going to barter it for bread and seeds because like I said, I want to own gold not get rid of it. Plus, those who own all of the gold become the ruling class not the peasant class. By owning gold I own resources and by owning resources I have power and options I wouldn’t otherwise have. So even in a worst case scenario gold puts me on top.
Should you own gold? Look, this is not investment advice, but I believe in having at least 10% of my overall assets in physical gold. Not paper and not collectibles. You want to own pure gold bullion and maybe even some silver. So personally, yes. I’d own some gold. You don’t have to own as much as I do…but own some.
How do you go about getting gold? Well there are lots of ways, but this is an area I can actually help you with. I own a Gold and Silver Dealer and we supply retail and wholesale gold and silver to people all over the world. Gold is a commodity so you can buy it from me or you can buy it from someone else, but my goal is to help you own it and prosper with it. We offer education, service, and hands on support to our clients who purchase from us and we have very competitive pricing as well. If you’re interested in learning more about gold and maybe even making an investment in some click here!
To purpose, wealth, & freedom.
Jerry Fetta is the CEO and Founder of Wealth DynamX. He is a nationally recognized financial expert featured in Forbes, Fox, Chicago Weekly News, and other publications with dozens of features on popular podcasts and has earned endorsements and affiliations with names like Grant Cardone and Dave Ramsey. Jerry’s mission in life is to help create millions of financially educated and wealthy families navigating their economic futures with certainty and building more prosperous communities around them. Learn more at www.WealthDynamX.com