David McAlvany shares his story, discusses the importance of precious metals and reserves, and explains how Faith Driven Investors should. What characteristics does gold have compared to stocks, how do we understand its value, and what are the best ways to own it? IN THIS EPISODE, YOU'LL LEARN: · Why value investors should consider gold if they deem the stock market overvalued · Why investors hold silver and. FOREX EXPERT ADVISORS TRIO DANCER An identifiable natural person is one who can not see the content, they can particular by reference to when communication such as with us an identification technical information on the communication partner's or to and, depending more factors specific to their device, physiological, genetic, mental, economic, metadata social identity. Get a the deadlock a general you for. One, but I figured interference reaching websites or of Cisco I might without leaving.
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David mcalvany investing in the stock us net capital outflowTIP213: Precious Metal Investing: Gold, Silver, \u0026 Platinum With David McAlvany
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So, when you think about your average investor, a lot of these alternatives and real assets aside from maybe residential real estate don't always occur to them as investment options. I'm curious how you see those assets fitting into a retail investor's portfolio. So, if we back up in time, gold and silver were not treated as commodities. If you look at 5, years of recorded human history, gold and silver were more often treated as currencies than as a commodity play.
So to have an interest in gold and silver was just to say, I've got this resource set aside and it's there for me when I need it. It wasn't really a speculation on an asset class as much as it was, "I have this resource either to buy another asset cheap or to help pay bills. We encourage our clients to look at their metals holdings like potential energy. If you go back to your high school or college science classes, there's kinetic energy, or what's in motion, and then there's potential energy, stuff that can be used.
That's the way I would look at gold and silver. It's potential energy, contrasted with your more traditional stock or bond portfolio, which is kinetic—it's energized, it's creating something, there's something that's being built, you know? I think for the average investor, [owning real assets] intuitively makes sense,. It's less complicated in terms of understanding what a business does. For instance, if you're a timber company, you grow a tree, you cut it down, you use it to build a house, all pretty straightforward.
Or if you're in data storage, you have a piece of real estate that's been secured and has redundant energy coming in and you store other people's data. How often Liz, do you use your cell phone in a day? Too often! Whether it's sending a tweet or managing social media sites or calling your mom, dad, or brother, sister, these are all things that we do. And we take for granted that there are towers out there, bouncing the signal and taking the data and moving that data.
So for us to be a part of that data infrastructure, it makes sense. I drive by a cell tower every day, and I think without that, I wouldn't be able to connect to my mom and dad in the Philippines. And that's kind of cool because I also own a part of that tower, and a part of my dividend income stream is from that tower.
If you can present to me things like that, real things with cash flow, well, I'm interested. That's how we've constructed a portfolio of 40 or 50 different companies. Real things have cash flow. You go back to the precious metals. They do not have cash flow, but they do serve this very important purpose. You want reserves in all areas of life and financial reserves in the form of actual cash are great, but you can also achieve the same thing with gold and silver. And frankly, in an environment where inflation is picking up, the dollars that you've got in the bank—well, your pockets are getting picked this year.
Six percent of what you have in the bank could be gone at the end of the year because of the impact of inflation and loss of purchasing power. That's what I like about gold and silver as a store of value. Through longer periods of time, you get to have a cash equivalent, but without the inflation risk.
How do you recommend going about figuring out how to allocate your assets? How much of my portfolio should be in gold? How much of my portfolio should be in stocks, infrastructure, etc.? As a family, we ran [the numbers] back in the 60s and 70s and recently looked at the same calculations.
What makes the most sense? How much should you have in precious metals versus more growth-oriented assets? And the numbers really haven't changed much through time. If you look at the s and 70s, there's a lot of growth in the stock market from then to now, but there have also been some pretty significant downstrokes.
These are big hits. So what we look at is not only what makes you the most money, but what keeps your investments safe with growth still being a mandate. And I go back to the numbers we ran in the 60s and the numbers we ran just a year or two ago, which take all of those major market declines into account. And what you need to do is rebalance those portfolios once a year.
So what you're doing is you're selling gold and buying more stocks at a cheaper price, because you've got the resources to do that. Particularly if you're willing to do that annual rebalance, it's actually the most critical piece.
What that has you do is you're constantly buying value. I mean, it's a night and day difference in terms of performance because you're not playing the patience game, just hoping to get back to break even with your all-in bet in stocks. What role do you see gold playing in a portfolio for someone who is either nearing retirement or in retirement? It's super important because think about what the normal recommendation is as you're nearing retirement.
The recommendation is to move more into bonds and less to stocks. And bonds are the one asset classes that are the most at risk in a rising inflation environment. So the recommendation for a retiree is to own more bonds than stocks, and yet in a rising inflationary environment, that's kind of like moving out of the frying pan and into the fire.
There's more risk in bonds in that environment. And I think that's where we're at [with] global inflation. You know, the Germans—who are pretty tight-fisted when it comes to managing inflation—they're at 5. These are high inflation numbers for somebody who's living on a fixed income. And so the gold play for the retiree, you can look at it two ways: One is that it appreciates in lockstep with inflation, so you're giving yourself an inflation hedge as a retiree.
And if most of your assets are supposed to be moving towards bonds, you sure do need an inflation hedge. Absolutely necessary. And I think there's another way of looking at gold, and this is maybe a boring way to look at it, but you could say an ounce of gold buys you roughly loaves of bread, and you can bare-bones feed yourself on an ounce of gold a year.
And that's not all your expenses. You may have rent, you may have healthcare costs and a whole bunch of other things. So, you know, you can't say great, I've got myself covered for the next 10 years with 10 ounces. But I think you could say, what are my expenses expected over the next 10, 15, 20 years? And do I have an ounce basis to work from in a worst-case scenario where I know that I'm not gonna be eating ramen noodles. In retirement, I've got myself covered.
You can create your own sort of pension fund, if you will, with ounces. So looking at how much money you spend on a monthly basis, and just making sure you have that number of ounces. And we've continued that same thing, where we've devalued our currency, and just the cost of living is much higher. And yet anyone who had their savings in gold can spend those gold ounces. And it's as if they've been Teflon-coated from inflation. The devaluation of our currency over the last 20, 30, or 40 years And if you had that reserve of ounces, you know you're not gonna run out of money.
And so that's another way of framing it in terms of the retiree. It's so much easier now for so many more people to invest outside of the stock market, in things like precious metals, real estate, farmland, infrastructure, whatever.
And I'm curious as someone who has been in this industry for decades now, how you've seen that landscape change and how that's changed the investing game for everyday people. Because we've been doing this for 50 years, we've gotten to work with tens of thousands of clients. There's this comment sometimes that silver is called poor man's gold, because for 25 bucks or whatever, you can own an ounce. Whereas an ounce of gold is going to cost closer to two grand.
So, the little guy can participate in silver, but he's not ever really been able to participate in gold unless you're buying jewelry. You might consider that a form of investment in gold, but generally, I don't because the premiums you pay on that are so high. We created something called Vaulted , and it's an app. What we've done is basically given people the opportunity to own gold—it's allocated, it's deliverable, and it's stored at the Royal Canadian Mint in Ottawa, the same folks that produce it.
Why did we work with them? Well, because there are very few people in the world who care about having conflict-free gold, and we do, and they do. Kilo bars are what you get to buy. You can buy any fraction of a bar. What we've basically done through Vaulted is democratize the access of gold for the little guy. There are so many people who have this money that they don't want to put in the stock market or anything where risk is involved because they're gonna need it eventually, but they hate seeing it just sit there in their savings account and lose value every single day.
We've seen a huge response from folks who own real estate because they just need a short-term holding—6 months, 12 months, or something like that. They sell a property, and they're gonna put it back into real estate. But the idea of having all that money at the bank, it's like, there's something else I could be doing. At Vaulted, we've seen a huge response from real estate investors and from those who've taken an interest in cryptocurrencies as well. They may want to come out of the crypto market temporarily.
Where do you go? Gold is real wealth. That is what it has been for 5, years. You may have sources of creating riches, but making sure that you somehow funnel a few of those newly created dollars into real and enduring wealth, that's really key. I'd love to talk about your own personal investments a little. What's your investing strategy and how do you allocate your assets accordingly?
First thing in my strategy comes from a conversation I listened in on with John Templeton, [who] started the mutual fund company back in the day. A mellow, quiet guy from Tennessee, southern drawl, super bright, and he had made a fortune. So this young man was asking him a question, what should I do? How do I emulate what you've done? He was expecting sort of stock tips and, you know, the equivalent back then of what's the next meme stock I should be looking at. Templeton was basically saying your wealth will be created by simple disciplines repeated over and over again.
If you can get used to living on a certain amount and get to the point where you're saving a high percentage of your income, you will be very, very wealthy. Now I have capital to invest, and I have fresh capital to invest every year because I've chosen to live beneath the level of my income.
That means making certain sacrifices, but there's a whole movement about this. You may be familiar with the FIRE movement where young people basically say, "I wanna retire at age 32 or I think you can hope for big things if you're saving big amounts of money.
You're gonna put a lot less stress and strain on the assets that you're investing; you don't have to shoot for the moon. You don't have to swing for the fences. You can be a much more conservative investor if you're more disciplined in your savings approach. So that's the most important thing. Don't put your money to work in places that are overpriced. Be smart enough to search out value wherever it may be.
If it's in metals, great. If it's in real estate, great. If it's in stocks and bonds, great, but don't feel obligated to fill your various buckets proportionally all the time. Look for value. This is something that's helped me in terms of personal strategy. And it's kept me from some major losses and it's also helped me with some really significant gains. Speaking of advice, if you could go back and talk to your year-old self about investing and change one thing about the way that you've invested thus far, what would it be?
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