# 3 SGS – 7 Solid Advantages of Owning Gold – #3 Gold is a Financial Safe Haven
Isn’t a “financial safe haven” the same as a “hedge” when it comes to investing?
When you think of investing and the word “hedge,” what usually comes up? Most of us usually tack on the words “…against inflation” after that “hedge,” because that’s what it means. And yes, a “hedge against inflation” does mean a solid investment that will protect and maintain the value of your portfolio – during periods of inflation. Any investment that’s a good hedge against inflation needs to be able to retain the value of your money – no matter what the stock market or global banking systems are doing.
Now, when you think of investing and the phrase “financial safe haven,” what comes up? And again, a “financial safe haven” does indeed mean a solid investment that will protect and maintain the value of your portfolio during periods of inflation, however – it also means much, much more. The terms are sort of interchangeable – but they’re also different. They both point to gold and precious metals as the absolute best strategies when it comes to safeguarding your financial welfare. But, here’s the difference – a financial safe haven will certainly protect your money during a period of inflation – but it will also protect you if the madness of our banking systems crumbles and fails entirely under the load of debt this country has saddled us with.
Gold is the one investment that can serve as both a “hedge,” and a “financial safe haven.” Gold will give you equal protection against a number of fiscal and/or life scenarios. What kind of scenarios ? Here is where I love my job – because I get to explain why and how gold will not just help your portfolio hold its value, gold can literally keep you and your family alive.
What is a “financial safe haven?”
A “financial safe haven” is an investment that holds it value not just when the value of your money is affected by inflation – but when the entire structure of the banking system crashes, leaving only chaos in its wake. This is what happened in 1928, when the stock market crash triggered a run on banks. From 1930 to 1933, almost 10,000 banks failed or were suspended. Now, there was no FDIC yet, nothing was insured – so if your bank went down, your money went with it; it gone, just – gone. And most of the country’s banks went down. Those with stocks, bonds, or paper currency were largely out of luck, as their value sank to pennies on the dollar. But, here’s the thing: those that had gold – real, tangible gold on hand and in their hands – those people had what is called a true “financial safe haven.” They had gold – and gold kept its value while the banking cartels across this country imploded – plunging America into the worst depression in its history.
So, a “financial safe haven,” then, is an investment that will hold onto its value not just when banks and markets are on the ropes and the value of a dollar is bouncing around – but when everything literally goes to “hell in a hand basket.” Again, gold is the one currency that is valued no matter what the banks or markets are doing – or if they even exist.
Why do you need a “financial safe haven?”
Remember that great old Christmas movie with Jimmy Stewart, “It’s a Wonderful Life?” Remember that scene in the movie after the market has crashed, and all of Jimmy Stewart’s friends and customers run to his little Savings and Loan Company to try to get their money out? What you see is an inside shot of Jimmy Stewart’s little bank, with all these people pushing their hands through, palms up, begging for the money they’ve all deposited there. But Jimmy Stewart’s Savings and Loan didn’t have enough money to give all of them all their money back (because of the way this country structures credit and debt, but that’s another movie), so he tries to hand each of them just enough to “get by” with, so he can “save” his Savings and Loan. Do you remember this scene?
What if that kind of scene took place throughout America, at every one of the almost 10,000 banks that are in this country currently, and by the way – do you remember that number from 1930 to 1933? (Scary, isn’t it?) What if one of those banks was yours? Now – imagine standing at the counter of your bank – trying to get your money out – and being told that you could only get half, or a third, or less – of the money you put into the bank? Or even worse – what if there wasn’t any actual money left in the bank at all? What if your bank was closed, shuttered? What would you do? How would you live? How would your family survive?
“It’s a Wonderful Life” has a wonderful heartwarming ending, but that movie was a Hollywood dream, created for a nation that was desperate for hope – and had none.
If this happened in real life – today – tomorrow – in a year – what kind of ending do you think history would write for us? When the credits roll at the end of that movie – what are they going to say?
This is the ticking time bomb that we are successfully (for the most part) ignoring;– this country’s $18 Trillion Dollar National Debt is ticking, our clock is winding down, it’s definitely going to blow – as history has proven time and again – we just don’t know when.
So. This is why you need to invest in a financial safe haven as one of your assets, and the strongest safe haven – down through the centuries – has been gold.
So – think a bank run or failure can’t happen again? Remember Katrina? IT ALREADY HAS….
As a Wealth Advisor, I’m often amazed that people tend to think that the kind of “run on banks” that happened during the Depression is something that will never happen again, that can’t happen again. But what if I told you that it already has – and you were there? In fact – we were all there! We watched it happen, and a whole portion of this country experienced it – but – again, as a Wealth Advisor, it’s my job to point out that many people missed the ramifications of what it showed us about the banking system – and what could happen if – and when – it goes down. My job is to help people learn how to protect themselves not just in this scenario or that scenario – but in the absolute worst case scenario.
Here’s the most recent worst case scenario: in 2005, Hurricane Katrina hit the Gulf Coast of the United States. Katrina was 400 miles across, its winds peaked at 175 mph – and people – that is a Category 5 hurricane – and we weren’t ready for it. And Hurricane Katrina is just one of many things this country has experienced in the last 25 years that could be called a “worst case scenario.”
In Louisiana, Mississippi, and Alabama hundreds of thousands of people were displaced, lost their homes, lost every possession they owned – and lost loved ones. Almost 2000 people died. Katrina caused more than $100 billion in damage – and that’s still approximate. 80% of New Orleans was under water, sometimes over 20 feet deep. In fact, there were a lot of places under
water, and a whole lot of them were banks. And while those Southern states were being ravaged – something very similar to 1933 happened to the financial and banking systems in that area of the country. The banks shut down.
The power of investing in gold – what it can do for you
One of the great clients I have now actually lived through Hurricane Katrina. He’s somebody I admire and respect tremendously. He was truly tested, and he protected his family and came through something very few of us will ever have to deal with in our lives. When we talked about his experiences during that time, what impressed me was how quickly life can simply fall apart, and just how fast the “rules” of whatever universe you know and understand can change completely.
In a matter of a few hours, my client, 42, his wife, his three kids, 8, 12, and 15 years old – were homeless. Not only this, but his local Credit Union, the bank that had all of his money inside – was underwater. His money was frozen; no debit card, no checks, no ATM’s. This sort of sounds like what happened in that movie, doesn’t it? But there was no Jimmy Stewart to bail anyone out this time.
Here’s what happened instead: my client had the foresight to strategically diversify his investment portfolio. He was a long-time believer in the value of gold, so he had a collection of gold coins in reserve, coins that he kept in a safe in his home. Those coins were accessible, they were in his possession, he could hold them, handle them, pack them, and take them with him – and he was able to use those coins as currency to keep his family going. Yes, my client had a great portfolio and he’d invested wisely over the years, but you can’t exactly use a stock or a bond to buy groceries or clothes, can you? His portfolio couldn’t do a thing for him when Louisiana, Alabama, and Mississippi “went to hell in a hand basket,” and his family became homeless – overnight.
Gold might be a better “happy ending” than any Hollywood movie can write
The real happy ending here is that my client was able to use that gold to get his family out of Louisiana. He was able to get them safely to his sister’s home in North Dakota. Not only that, but the gold he’d invested in years ago kept his family afloat for the 6 months it took to get back home to begin rebuilding. My client may have lost everything, but what he did have was gold – and that gold fed, clothed, and housed his children and his wife. Gold is what gave him the financial stability to rebuild his life and start over again.
This is the kind of cautionary tale that reinforces what I know about the value of investing in gold. Not only will gold diversify your portfolio and protect you against inflation, it will actually keep you and your family afloat if the world – or it’s banking systems – explodes and all bets are off. There aren’t a lot of things that can deliver on a promise like that today, but gold does, and it has throughout history.
If you’re concerned about the effect the markets, the banking industry, and the National Debt are having on the value of your money today – give me a call and come in for a talk. I’m always happy just to take a look at your portfolio, talk about any questions you might have, and look at where you might be if Phoenix suddenly fell into the sea, though that might be kind of nice around July and August. In any case, if I can ever help someone in any way, it’s always the best part of my day.