Gold — A Millennial Point of View

I originally wrote this piece to help explain to my friends and family why I chose a career in the often misunderstood and misrepresented Gold and Finance industry and more importantly, why I believe it is so important. After I shared this message amongst my network I realized this is a message that doesn’t get enough airtime and I wanted to expand its reach so I am bringing it here, to Medium.

A lot of you don’t know why you would want to save in gold and here is a great example I just recently experienced. A family friend told me that back in 1979 she had won $100 in gold, which she instantly sold at the time. Knowing I work with gold, she asked me what it would be worth if she had kept the gold instead.

I responded back to her simply, “You would have $1447.6 CAD today,” and she seemed disappointed. She thought it would have made her rich or something, I’m not sure what she was expecting.

So let me explain the power of gold here because I do think it is important.

Gold isn’t about getting you rich, gold is about preserving value and purchasing power — avoiding what makes you poor. Think about it this way: If she had invested in the Canadian Dollar (ie. put that $100 under her pillow and held it) she would still have $100 today, but her $100 would only give her $21.99 in relative purchasing power as inflation has devalued CAD incrementally since 1979. If in 1979 she had put that $100 in a non-risky stock like HMI (Housing) she would have $690 today, after accounting for inflation, equating to about $151 in relative purchasing power. People don’t recognize when their currency is devalued because $100 today is still $100 tomorrow, so we see it as being constant… but things like increased prices, inflation, etc. and the now popular Shrinkflation (where the price of a jug of milk is the same as it was two years ago but you get less in it) are ever present.

Think about this — technology has made farming, fishing, manufacturing, etc. much more advanced and cost efficient. It is far cheaper to build something/grow something/ship something today than it was 40 years ago, but prices are still going up slowly. So think about how much prices are actually going up when you take into consideration the increased margins with technological advancements. Something might have cost $10 to make and was sold for $75 ($65 margin) back in the 70s. Now it can be made for $2 and it is sold for $200 ($198 margin). This is because the actual purchasing power (the value of that fiat margin) has been devalued through inflation.

A popular misconception is that a savings account with, say, a 1.5% interest rate is great. But the interest you are earning with these accounts are actually less than the rate of inflation — so while the numerical amount of money in your account will appear to go up, your purchasing power and the value of your money have actually decreased.

The Baby Boomers are the first generation to be better off than their children. Economic progress, population growth, and even Moore’s Law have all started regressing, for the first time ever.

We are now in this ‘Gig Economy’ (we love to give it cute techno-religious, positive spin names like ‘The Sharing Economy’ to make everyone feel better) where everyone is just working as an Uber driver or AirBnB-ing their house, and no one can get meaningful, long-term work that is worth it. You work for three years just to finally get a raise, but the rate of inflation has actually made it so that even with the raise, you are making less than you were when you started your entry level pay 3 years ago. You may have noticed this after receiving a wage increase at work and being very excited for the extra money, but 6 months later you look back and realize you don’t seem to have much more purchasing power than you did years ago with your old wage. So in turn, no one is buying homes, everyone remains living at home with their parents or rents and no one is having kids because they don’t have the secure income confidence. If they do, they have them later in life and they have one child instead of the historically popular 2, 3 or more.

When the US went off the gold standard in 1971, all currencies essentially became fiat monies, with their value derived from the governments that issue them rather than from commodities. This was the birth of instability of floating currencies. This is why gold is powerful. Gold has been the best form of money for 6000 years. It works outside of the central banking system, so it isn’t vulnerable to any geo-political (or similar) volatility.

People tend to view gold as fluctuating up and down over the years, but in fact, gold has always remained constant. It is fiat currencies (CAD, USD, Euro, etc) that fluctuate against gold — we just don’t view it from that perspective because CAD/USD, etc are so heavily ingrained in our everyday lives.

With Goldmoney, we offer a platform for savings and payments in physical gold. Just like you would have a CAD account, a USD account, a savings account, or a chequing account with a traditional bank… with us, you have a gold account with actual physical gold in a Brinks vault of your choice. You also have the convenience of a Prepaid Card linked to your account to spend your gold anywhere MasterCard is accepted.