Gold: the lifetime preserver of wealth

History has taught us to accumulate gold

When people ask the legendary investor Warren Buffett on his opinion on gold, he says that because gold is just a commodity and doesn’t generate money nor gives a dividend, he doesn’t invest in gold.

Just because it doesn’t have a revenue stream doesn’t mean that you shouldn’t be accumulating it. Think about how gold is seen as a universal currency, a currency that people in every country can use to make transactions among each other. Look back at history and read how gold was used as currency in ancient civilizations. Gold has been a central part of society for most of human history.

With the stock market going high and real estate prices going higher, it’s reasonable to not want to invest in gold, especially since gold has drastically underperformed against the S&P 500 since 2008. But what many people should do is have some gold in their portfolio if ever the central banking system fails to save us from another recession.

Gold has been the commodity that kept the wealthy, wealthy. If you look throughout history, the wealthy people owned gold and have survived many financial disasters in their civilization thanks to gold. While gold can make them a target in times of class warfare, it can buy them more time to live and even create a legacy for themselves in times of anarchy and civil unrest.

There are many historical examples where gold helped preserve wealth.

The first example happened when the Confederate States in the United States collapsed. After the Civil War ended, the Confederate Dollar went to zero as it was no longer useful. The many people that had their wealth tied to the Confederate Dollar went from being wealthy to dirt poor. The minority of Southerners that had a lot of gold were able to survive the collapse of the Confederate Dollar and were able to capitalize on the economic depression in the South.

The second example happened centuries ago. In the Roman Empire, while most of the people conducted transactions with fiat currency, the wealthy were known to horde tons of gold. While the Roman Empire lasted for a very long time, many of the wealthy continued to accumulate gold while also trying to capitalize on the ups and downs of the economic cycle, similar to what’s currently happening today. When the Roman Empire fell, not only did Europe fall into the Dark Ages where chaos was common but that the Roman currency went to zero. The wealthy that had gold were able to hire the many middle and lower class Roman citizens to work for them and build castles and fortresses. With no government, the wealthy had to create their own government, leading to the creation of feudalism. The wealthy established their own small empires in Europe and they were able to afford it all thanks to their massive gold reserves.

And yes, the small empires of Europe did clash against each other and combined into bigger empires and eventually created the countries of modern-day Europe.

But the point of the two stories is to show you that the best time to accumulate gold is when times are good and stable. You wouldn’t want to start to accumulate gold during a crisis because that’s when everyone else is doing the same and the price for gold will be a lot higher.

Some might say that investing in gold ETFs might be a great way of investing in gold but the only issue with it is whether they’ll give you the amount of gold that you deserve (based on how much of the ETF you own) or not. That’s why I prefer to buy physical gold.

Because one day, when the fiat currency system fails and anarchy are happening, having gold will make it easier for you to survive and capitalize on the bad times.