Matt Golab, Chief Advisor and founder of Aaron Matthews Financial Resources recently discussed gold and its position in an investment portfolio. Mr. Golab explains:
It's the last day of February and stocks post four months of straight gains the day before the sequester takes effect. Now a looming set of budget cuts are supposed to turn on when we turn on the lights tomorrow but despite that gold drops one percent to $1,580 per ounce.
There are so many who are trying to discourage consumers from owning gold in their portfolio and make it sound like an illegitimate option. Many in the media and most run of the mill advisors would rather see you put your money in stocks, bonds, and mutual funds.
The difference between these media personalities and most financial advisors are by nature different than the gold loving consumer. The "gold lover" by nature is conservative and are concerned about the nations debt, government spending, over reliance on the government, protection from a mysterious and vulnerable stock market, and the chance the dollar could lose a lot of it's value.
Where does gold fit in a portfolio? Matt continues:
I hold many of the same concerns as most investors and understand why gold is such an interesting and attractive investment. Recently a book by Dan Kennedy cataloging the behavior of baby-boomers and seniors. Inside this book he reveals that 60 percent of boomer and senior men and 40 percent of boomer and senior women "view gold as the best investment" (long-term) but "don't necessarily believe (gold) is the safest."
With the issues in Washington and the increasing national debt, the demand for gold will continue to rise. But is it possible that the recent gold lows and quite possibly a gold bottom cause many to purchase the wrong kind of gold. I believe it could and believe that Franklin D. Roosevelt's gold confiscation act of 1933 could be a great example of this fact.
Roosevelt issued Presidential Proclamation 2039 which was an old statute that was never removed. This statue forbade "hoarding of gold coin, gold bullion, and gold certificates." Not only was it not allowed the penalty was huge, $10,000 (adjusted for inflation equal to nearly $200,000) and up to 10 years jail time.
In 1933 the government had to be more conservative because of the gold standard. The gold standard meant they couldn't print money at will. This forced the government to get creative, confiscate privately owned gold. Each citizen was forced to turn in their gold for just over $20 per ounce, the next year the Gold Reserve Act set a new value for gold at $35 per ounce.
Now you might be saying, "nice history lesson Matt, but what's the point?" Mr. Golab goes further:
Well this is very relevant today and a huge lesson of government behavior. What we can learn is there is something lurking in the shadows that could cause so many gold portfolios to be at huge risk? Reporting.
There are two types of physical gold portfolios: Reportable and non-reportable. The difference is one is not subject to confiscation and one is. Reportable are gold and silver bullion and most gold and silver coins, most of these are considered commodity transactions and are thoroughly regulated. There are not a lot of options for non-reportable, two are the Austrian Philharmonics and Canadian Silver Leafs.
If you're worried about government spending, large government debt, government reliance, a crazy volatile stock market, and a weak dollar you might want to consider gold in your portfolio. My recommendation is own the right kind of gold, especially now that gold is possibly at a bottom.
