Why Did I Buy Gold?

April Showers really brought May Flowers (so far). Increasing inflation data tanked the markets last month, and flatlined inflation data this month shot the S&P 500 to an all time high. What a time to be in the market.

If you read our newsletter on how to buy bonds from the Treasury, you might remember the great snow storm of January 2024. This great snow storm forced me to stay and “work” from home. As I was reading about different forms of diversity, I stumbled upon bonds and precious metals. By the end of the day, I had bought both and seen no snow. The south overreacted at the threat of snow, what else is new?

Precious metals (mainly Gold and Silver) are seen as inflation protection. Since the supply of gold is limited, unlike money, it retains or gains value over time. If I put a $10 bill and $10 worth of gold in a safe and locked it up for 20 years, the gold will have the same buying power (generally speaking) as 20 years ago, but the $10 bill would have lost significant value due to inflation.

The below chart shows the price (in USD$) per ounce of gold in red and the US Dollar Index in blue. The US Dollar Index is the value of the USD$ relative to six other major currencies: Euro, Swiss Franc, Japanese Yen, Canadian Dollar, British Pound, and Swedish Krona. It is a way to represent how a fixed amount of gold increases in value generally in line with inflation.

Gold is also seen as a good investment during a recession. As stocks and money lose value, investors flee to the commodity known to maintain value. That also increases the price in a sort of self fulfilling prophecy.

From online marketplaces to ETFs to Costco, it is easier than ever to buy gold. Since I don’t have a Costco membership (true wealth) and really wanted to physically hold the gold, I had to go with an online marketplace. 

I bought 1 OZ of gold for $2,146 (including fees and shipping) from the American Precious Metals Exchange in January. Right now, 1 OZ of gold is trading at $2,389, an 11.3% increase. Neat, but this will not continue in the long term. Kind of like bonds, curiosity killed the cat. I wanted to experience how easy it is to buy, how it’s packaged, and track its value. I also made my first Instagram reel about it! That’s at least what I tell myself. Deep down, I just want to be like Ron Swanson and have a significant amount of gold buried around my house and town.

In order to truly follow in Ron’s footsteps, I will have to increase my gold purchasing and buy a shovel (which will hurt my returns). Maybe I will switch my monthly allowance for Yankee Candles to gold…

Call to Action

How much diversity do you have in your portfolio? You can review Mike’s letter on a Balanced Portfolio as a guideline! If you want all the diversity but none of the work, a Robo-Advisor is a fantastic option.

What We’re Reading:

Killers of the Flower Moon by David Grann tells the true story of murders on a Native American reservation and the birth of the FBI.

I learned this was an award winning movie about three days ago… I haven’t seen the movie, but the book is fantastically written. I just finished David Grann’s The Wager and wanted to read everything he has written.

Debrief on Deck

Next week, Mike will go over some of our favorite personal finance apps, calculators, and websites. Hint: the real powerhouse behind the Dollar Debrief is google (search and drive) and coffee.

As always, please reach out to us with any questions or comments you have. You can reply directly to this email or find us on social media (X (formerly Twitter) and Instagram).

Until then, stay the course.

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