Wealth Preservation

The most important reason to include precious metals in portfolios today is that bullion provides wealth preservation in the current financial reality.  Gold has been used as money for over 3,000 years. Generations of the world’s wealthiest families have preserved their fortunes using gold, silver and platinum. For centuries, the words ‘gold,’ ‘silver’ and ‘platinum’ have been used to indicate the highest standards of excellence, and the allure of all precious metals is as compelling today as it has been throughout history.

Safe Haven

Precious metals provide the ultimate safe haven. They offer a strong defense against inflation, financial crises and the fiat (paper) currency destruction we are seeing around the world as governments erode purchasing power through currency debasement.  In the last decade, the Canadian and US dollars, Euro, Pound and Yen have all have all lost more than 70 percent of their purchasing power against gold. This trend will continue until fiscal and monetary discipline is restored, and there is nothing on the horizon to indicate that will happen any time soon.

True Portfolio Diversification

Precious metals are negatively correlated to other asset classes, so often perform best when the other components of a portfolio, such as stocks and bonds, are performing poorly.

Intrinsic Value

For centuries, the term ‘money’ referred to coins made of rare metals (gold and silver) with intrinsic value, and to notes backed by precious metals. Gold has intrinsic value because it is difficult to find, to mine and to refine. Gold is money, not a commodity. Gold trades on the currency desks of the major banks and brokerage houses, not the commodity desks.

The Dow:Gold Ratio

An excellent way to understand financial cycles is to look at a chart showing 100-plus years of the relative values of the Dow Jones Industrial Average (the ‘Dow’) versus gold. Called the Dow:Gold Ratio, this very reliable indicator measures how much gold it would take to ‘purchase’ one share of the Dow at any given time.

Learn more about the Dow:Gold Ratio here.

Over the next few pages we will take an in depth look at Gold, Silver and Platinum and examine why these three precious metals play such a crucial part in generational wealth preservation.

Why Gold?