What a tough year this has been for pursuing money. Bank and brokerage firm failures. Sub-prime mortgages and housing market crashes. Government bailouts of Citigroup and GM. Credit crunches and high unemployment. Stock market roller coaster volatility and terribly low interest rates. Iraq, Iran, North Korea, Afghanistan…
How do you react to all the negative news? Where, or in what do you place your faith for the future? Sirach 31:5 says that one who loves gold will not be justified. One who pursues money will be led astray by it. Heed what Jesus taught His disciples in Luke 12: 22-36. Do not worry. Be ready for action. Make “purses that do not wear out.”
How diversified are you?
You know that #diversification is the key tenet for a sound investment strategy. Consider gold as a component of your asset allocation. Could this be the purse that does not wear out?
Gold is considered a long-term storehouse of value. As such, it fulfills all the functions of money. Bullion bars are bulky and must be safe-kept somehow. On the other hand, gold coins are portable and come in varying denominations. Universal recognition and acceptance as a form of payment make gold coins easy to buy and sell worldwide. And recently exchange traded funds like “Spider Gold Shares” allows investment in gold by virtue of a financial instrument that tracks the price of bullion.
Of paramount importance is gold’s ability to retain its purchasing power. It has done that and then some. According to Blanchard and Company, $1000 invested in generic gold coins in 1970 would be worth about $40,000 today. They say gold is up 150% since 2001. Although gold fluctuates in value, this average 10% annual return demonstrates gold’s ability to keep pace with inflation.
We can’t do anything about the stock market’s and interest rate’s reaction to the war and terrorism, world and economic news, fear of a financial freeze and private company governance. We can’t do anything about the UN or the axis of evil. We can’t do anything about the weather.
We can control our responses, however. We can maintain hope and portray a positive countenance about our future. We can stop waiting for a return to the stock values of the 1990s. We can decide to manage investment risk more honestly and proactively. We can decide to diversify amongst and within asset classes. We can act with an attitude of, “Here we are today. Let’s go forward from here.”
And when the gold dust settles, and we have more confidence about the clarity of the immediate future, we can turn in our gold coins to be melted down and made into investment vehicles of another nature. As Tobit 12:9 instructs, community driven investments such as meals and school supplies for under-privileged children. Relationship driven investments such as rings, necklaces and bracelets for our loved ones. Investments that offer returns that are immeasurable in worldly quantitative terms. Hopefully as with Peter in Acts 3:6 we can say, “I have no silver or gold, but what I have I give you.”