A Secure Start to the New Year | The Gold Standard 2248

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As this year comes to a close, we are all bracing ourselves for a tough 2023. Economists predict that the new year will be a time of economic upheaval. For many investors, the question of where to put your money, especially under current circumstances, does not have an easy answer. New Year’s Eve is a good time for reflection. Take inventory of what you’ve learned and use that knowledge to prepare for the future.

We discuss having a secure start to the New Year. Although they begin their discussion by examining the financial problems we’re carrying into 2023, their message has a silver lining. In this case, it is more of a gold lining. Retiring during a bear market has its challenges but retiring in 2023 has a multitude of other significant threats. Unpredictable environments unnerve retirement planners because you’ll likely run out of money over the long haul.

The financial problems facing us are not simple or easy to fix. The US has a global trade imbalance, budget deficits, excessive currency creation, vast debt piles, and unfunded liabilities.

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.”
—John Adams

The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. Our government has run deficits for 77 of the past 90 years. As of November 2022, the national debt is $31 trillion, 96.19 percent of our GDP. Foreigners own 33 percent of the national debt, which means our country has the largest external debt worldwide. The size of our national debt is incomprehensible and impacts American citizens. There are only two ways for the government to increase revenue. Raise taxes or reduce spending on infrastructure, social safety nets, first responders, and education.

We’ve seen debt accumulate in so many areas that we sometimes forget about the growth of the government’s unfunded liabilities. Unfunded liabilities are promises made to us by the government but not yet funded. These include programs like Social Security and Medicare. The US has over $250 trillion in unfunded liabilities. Every day that goes by adds another $9 billion. Unfunded liabilities grow six times faster than the US economy.

The Federal Reserve has printed $4.82 trillion since 2019. It is no wonder prices keep climbing despite aggressive rate hikes to clamp down on inflation. We saw the year-over-year Consumer Price Index (CPI) reach a 40-year high of 9.1% last June. Inflation spun out of control in 2022 because of rampant money printing. The Fed continues its precarious balancing act of raising interest rates to reduce inflation without pushing the US economy over the edge. Higher interest rates make it more challenging to borrow money because borrowing costs become much higher. While the tide against inflation seems to be turning, there’s a long road ahead before the Fed eases up on rate hikes.

After the spot price of gold hit highs well above $2,000, the price began trending downward but held its value as it always does. There is no better store of value than gold. When you measure the precious metal in terms of dollars, the volatility comes from the value of the dollar, not the gold. Gold has always done well in inflation and deflation because it is an actual store of value.

Gold is money. You could buy an ounce of gold in 2016 for around $1,200. Now gold costs about $1,800 for an ounce. You don’t have to connect gold to another benchmark. Gold is constant and resilient unto itself. It’s important not to get distracted by the day-to-day ups and downs of the dollar price of gold. As Ken reminds us throughout this series, “Gold will be there when you need it.” And that brings peace of mind. Another advantage of owning physical gold is that it gives you options that other forms of money can’t offer.

Ken shares another one of his favorite gold bullion coins, the Canadian Gold Maple Leaf. Since 1979, the Canadian Gold Maple Leaf has been a mainstay in the global bullion coin market. It dominated the coin bullion industry until 1986 when the American Gold Eagle hit the market.

Today, the Canadian Maple Leaf gold bullion coins are the second best-sellers in the world (second only to the American Gold Eagles). At a gold purity level of 99.99%, Canadian Gold Maple Leaf coins are the purest gold coins in the world and have a distinctive finish. Starting in 2013, the Royal Canadian Mint added multiple high-tech security features into the design, such as micro-engraved marks. Two years later, unique radial lines were added to the background of the design. The light-diffracting patterns from the lines have become a hallmark of the Gold and Silver Maple Leaf bullion coins. The Canadian Gold Maple Leafs are IRA-eligible.
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