In much of the western world gold is considered to be a commodity. So instead of viewing it as money (like civilizations did for thousands of years) we now view it as a simple commodity to be traded and bet on. This however, comes with a unique set of challenges.
Lets go with an example.
Say you have $10 in your pocket. You purchase gas for $3.00 a gallon and receive 3.33 gallons of gas. Next week, you have another $10 and purchase gas for $2.50, receiving 4 gallons of gas. In this scenario we could say that your money is worth more this week, than it was last week. Because you had the same amount, but it represented a different value, it used to represent 3.33 gallons, and now it represents 4 gallons. You could say this is a capital gain, because your same amount of capital has gained purchasing power. However because money is money, you will not be taxed on this gain.
You purchase $10 in gold, this gives you 0.23 grams (at $43.49 a gram). So this week you could buy 3.33 gallons of gas, but you decide to wait. Next week you go to get some fuel which still costs $3 a gallon, but now your gold is worth $11 for the same 0.23 grams. When you trade your gold for fiat currency, you will be charged capital gains tax.
The question is why? If your fiat currency can have more purchasing power with no capital gains tax, then why cant your gold have more purchasing power without capital gains tax? Because, for some reason, gold is not considered money, it has become a commodity.
I'm sure you guys can tell by now, but I think gold should be considered currency, and we should have the choice of using fiat or gold, on an even playing field.
Last night Britain voted to leave the European Union with 51.9% in favor (17,410,742 votes in favor to leave, and 16,141,241 votes to stay). This caused the Dow Jones to drop more than 500 points as soon as US markets opened.
How did my stocks fair? Not well, all of my stocks are down about 3%, with the exception of Nokia (based in Finland) being down 8.6%. That's not great news for me, but its horrible news for pensioners and people who wanted to retire later this year. Overall, the markets will probably recover, and now is a great time to go shopping while businesses are selling at a discount.
Now, lets talk about gold. Today gold is up 4.5%, not too shabby. This gives gold a +12.34% gain in the last 365 days. Any investment that grows 12.34% in a year is excellent. So lets take a historical look at golds ability to maintain it's value.
Today gold is worth $42.45 a gram (fluctuates constantly, was at $42.70 earlier).
Thats +4.5% in the last 24 hours or:
+12.34% in the last 365 days
+126.66% in the last 10 years
+383.36% in the last 15 years
+3,658% in the last 50 years
This means that through all the small crashes, the Great Recession, and now the Brexit, gold has always maintained itself as a long term store of value.
It's equally important to remember that gold should not be looked at as a trade commodity. Instead it's a store of wealth, or better yet, the best performing currency in the history of the world. So don't buy gold as an investment to sell later, buy gold as a way to preserve and enhance your savings.
Have you heard someone use the the word gold as a way to describe something positive? That’s because gold has a positive value! It always has, and always will. For this reason I like to keep some of my money in gold at all times.
How do I keep my money in gold? I use BitGold (soon to be GoldMoney) to store allocated bullion for me around the globe. Bullion is just a term for gold bars / rounds, allocated means it actually physically belongs to me and I can request it to be physically delivered at any time. There is a huge difference between owning allocated bullion, and paper gold or stock in gold companies. BitGold also issues a mastercard card that’s linked to your gold vaults, so you can sell your gold bullion instantly at any time and transfer that value to your mastercard. That's a lot easier and safer than owning gold bars at home that you would have to sell manually.
Depending on who you talk to they will either tell you gold doesn’t matter very much, or that it indeed is crucial to your portfolio. The decision is up to you, but personally I like to own gold that is accessible at any time.
My final reasons for why I prefer gold ownership. I like to have my spare cash in gold because it keeps the banks from being able to leverage my personal money for their investments.
Gold is also the best performing currency in the world, which means it will not be eroded by inflation. The best example I have ever heard to explain this came from the BitGold team, the story went something like this: In 1985 a McDonald’s hamburger meal cost $2.99, in 2015 that same hamburger, fries and a drink costs $5.91 a 97.65% increase, which means you need more money to buy the same product i.e. your money's worth less per dollar than it was 30 years ago. Now let’s look at gold, in 1985 gold was $327.00 an ounce. In 2015 your gold would be worth $1060 a staggering 224.15% increase! That’s why I store my money in gold, because it does not lose purchasing power over time like fiat currency does.