The Case for Precious Metals
What about "Buy-and-Hold" Mutual Funds?
"Wealth is neither created nor destroyed! It simply flows from the uneducated to the educated (or from the uninformed to the informed)."
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By 2024, gold price will double, silver will more than triple, here’s why – Patrick Karim
MUTUAL FUND FEES
ARE COSTING YOU 63%
OF YOUR RETIREMENT EARNINGS!
The typical investor pays over $155,000* in unnecessary mutual fund management fees over a lifetime!!! Don't believe it? Watch this PBS Frontline documentary to learn the dirty little truth about the retirement planning industry. What's more, 79% of fund managers don't even meet, let alone beat, the S&P 500 index! Don't DO mutual funds or RRSP's until you:
Try it for yourself. Use the CALCULATE NOW button to examine the corrosive effect of fund management and administration fees on your lifetime portfolio returns. Assume whatever parameters you like to see the effect that a 2% reduction in the rate of return (to reflect the tyranny of compounding mutual fund fees) has on your retirement savings.
Starting at age 18 and investing for 47 years with $0 initial deposit and adding $100 monthly to your savings, increasing contributions by 2% inflation at 6% annual interest, compounded quarterly, your total portfolio grows to $416,311.58. If you drop the interest rate by 2% to account for annual management fees, your total return is only $235,447.93.
The difference of $180,863.65 went to your mutual fund company and advisor. That's a total of ($321/mo) $3,848.16 per year to have a managed mutual fund portfolio and to pay your sales advisor for advice that underperforms the market 80% of the time! We can show you how to do it yourself for one tenth the fees!
MY MUTUAL FUND PERFORMANCE TESTIMONIAL:
As a financial advisor between 1992-1996 with Canada's leading mutual fund company, I made a small investment into two different portfolio mutual funds. Between October 1, 1999 to September 30, 2021, I made no contributions nor changes in either plan, nor had I made any withdrawals from them. Given the small amounts of money involved, I chose to leave those funds in place while simply following the typical money mantra of 'buy-and-hold' allowing all dividends to be re-invested.
I assessed the performance of these mutual funds during the volatility of markets of the past 22 years by calculating the actual long-term Return on Investment for both funds using this on-line calculator or this one. Not even factoring in the rate of inflation or allowance for taxes which would have eroded the actual purchasing power of these two investments, I was shocked and dismayed to discover the detrimental effects of the 3.02% and 2.65% mutual fund management fees on these respective funds. I finally sold these funds on 9/30/21 and moved them to my own self-managed Questrade account where I will do much better on my own.
~ James Steele IV - Wealth Coach
Had I instead been informed about "real money" and invested only in precious metals, my total 22-year long investment of $913.99 CAD invested in Gold or Silver bullion would have yielded dramatically better results. Historical bullion prices are available at https://www.gold.org/goldhub/data/gold-prices, at Kitco.com and the investment comparisons are shown below. The top chart in each box assumes the investment was made in Canadian funds and the bottom chart in US dollars. Note that there would have been a foreign currency boost on total returns if the initial funds were first converted into USD (all metals are purchased with USD anyway) and the metals were held entirely in USD for the duration of the holding period.
My combined investment of $913.99 into Gold or Silver bullion, rather than the two mutual funds, would have yielded 122%-165% higher portfolio values. A Gold portfolio would have grown in value to $4505.11 and Silver to $3327.95, rather than the mere $2730.43 combined mutual fund portfolio valuation that I did achieve. But mutual fund salesmen will tell you that precious metals are a poor investment.
Interestingly, based on a USD:CAD exchange rate of $1.4777 on 10/01/99 and $1.27 on 9/30/21, had I instead purchased the precious metals with $620.62 USD in 1999 and sold it all in 2021, the portfolio would have yielded a total gold value of $4557.09 CAD and an investment in silver would have yielded a total value of $3068.31 CAD, slightly less than the original CAD method. Thus, regardless of long-term currency fluctuations and the original currency used to make the purchase, ALL options would have yielded better results than the buy-and-hold strategy of mutual funds.
The numbers don't lie, but salespeople do; or they just aren't taught about real money!
Articles & Videos on Precious Metals and Inflation
Which Precious Metals Should I Invest In?
Gold and silver are the most popular precious metals. However, there are also many other types of precious metals, such as platinum and palladium.
Throughout history, gold has been an unparalleled store of value. Gold is a monetary metal and alternative form of currency. It has minimal counterparty risk. Gold has also served as a safe-haven asset in times of geopolitical upheaval or economic downturn. Central banks hold roughly one-sixth of the global investable gold stock to diversify foreign currency reserves. Historically, gold has been an effective diversification tool for portfolios.
Silver is a hybrid metal – it has incredible physical properties which make it useful in technology and as a form of money. These properties lend silver to a wide spectrum of uses. Approximately 50% of the annual silver supply is consumed for industrial purposes. Silver is affordable relative to gold and has a reputation as the precious metal of the “common person.” Like gold, silver is a tool for portfolio diversification, but its price is more volatile than gold.
Platinum and palladium are the lesser known precious metals. They both have incredible properties that can make them very valuable. Platinum and palladium demand are both driven by the autocatalyst market but also jewelry. They are rarer than gold and silver and produced in only a few countries around the world, making their supply more sensitive to changes.
To us, precious metals are a mandatory portfolio asset amid excessive debt levels and aggressive monetary debasement by global central banks.