56: Should Smart Investors Still Own Gold?

Gold has long symbolized wealth, security, and stability, but what does it represent today?

In this episode of Up Your Average, Keith uses a simple Hershey bar to reveal a complex truth: your dollars are worth less every year, and gold has a story to tell about why. From Roosevelt’s 1933 gold ban to Nixon’s 1971 shift to fiat currency, this episode unpacks the history of gold in America and what it means for investors in 2025.

You’ll discover why gold went from $20 an ounce to over $4,000, what caused those massive swings, and why some investors cling to it while others avoid it. Keith breaks down the pros and cons of owning physical gold, including taxes, storage, and liquidity, and explains when gold may or may not belong in a smart portfolio.

If you’ve ever wondered whether gold is a hedge, a hold, or a headache, this is your clear, fact-driven guide.

👉 Ready to make smarter investment decisions?
Connect with Keith at https://www.gimbalfinancial.com.

Episode Transcript

Keith (00:00):
What that has basically shown is that the value of the

(00:04):
dollars, the US dollars, hasdeclined dramatically. So if
you're gonna put a dollar inyour drawer and leave it there,
it's gonna be worth less andless and less. So the question
is, why would my friendphysically possess this piece of
gold or even crazier, this thispiece of gold?

Caleb (00:24):
Welcome to the Up Your Average podcast, where Keith and
Doug give no nonsense advice tolevel up your life. So buckle up
and listen closely to Up YourAverage.

Keith (00:44):
Hey, friends. I know it's rude for me to be munching on a
Hershey bar while I'm hangingout with you, but I just
couldn't resist the temptation.Back in the early seventies, by
around 1974, even Nurse was myfourth grade teacher. And she
believed in reading aloud tostudents and she pulled out a

(01:08):
little Roald Dahl in Willy Wonkaand the Chocolate Factory to
read to us. And that bookmesmerized me because of the
possibility of being Charlie andtaking over that chocolate
factory.
In that book, the setting wasroughly 1950s and this older

(01:30):
fellow was going to have to havea succession plan for his
factory and he brought thesekids in there. And when they did
that, a chocolate bar, a Hersheybar back in the 50s was priced
at about 10¢. And the goal wasthey would get that golden
ticket to get to go into thisfamous chocolate factory. But if

(01:52):
we skip forward and say that thegolden ticket is the ticket to
understanding of gold and how itworks in our economy, that's
what I wanted to kind of spendsome time talking with you
about. So if you go from 1950,that a Hershey bar was about a
dime, 1970, that same Hersheybar was about a dime, then 1980,

(02:13):
it costs you about 25¢.
And then today in 2025, when Ibought that, it was a $1.69 The
cost of the Hershey bar seemslike it went up, but it did not
go up. The value of our moneyhas dropped. It stayed
relatively stable between 1950and 1970, and then inflation

(02:34):
just took off. And so what Iwant you to understand is gold
has been used as money in The USfor a long time, the way back to
our founding. Money needs to besomething that's scarce,
valuable, and easilytransferable and gold fit that
bill for many people.

(02:56):
In US history, we started withthat kind of idea that it was
used as an exchange mechanism.And then in April 1933, we had
just come from the crash in 1929into the great depression,
President Roosevelt, byexecutive order, made gold an

(03:17):
illegal thing for US citizens toown. And on 05/01/1933, if you
had gold, you had to turn itinto the US Treasury at the
Federal Reserve, and they wouldgive you $20.67 an ounce for
your gold. And I want to stopthere for a second and give you

(03:38):
an idea of an ounce of gold. Sothis chocolate bar here isn't
really a chocolate bar.
I was just giving you an idea ofthe magnitude of gold and how it
works. And so inside thispackage is an American Eagle,
which this is a one ounceAmerican Eagle. This one ounce

(03:58):
American Eagle, if it was a coinback in 1933, and I had to give
it back to the US government,they were going to give me
$20.67 for it. Okay? And Iwanted to just show you the
transportability of gold by howsmall that is relative to this
Hershey's thing.

(04:20):
A friend loaned me this to usefor this show today, so they
also loaned me this, they werevery generous. This is a 10
ounce gold piece. And if youlook at this 10 ounce gold piece
relative to the Hershey's bar,you could probably get almost
three of these or 30 ounces inthe size of a Hershey package.

(04:41):
And so in 1933, you would havehad to take your gold coins and
give it to the US Treasury atthe Federal Reserve and they
give you $20 of US dollars and67¢ for your ounce of gold. Then
a year later, presidentRoosevelt signed the Gold

(05:04):
Reserve Act and it made itillegal for you to have this
anymore.
You couldn't have this in yourpossession. And they raised the
price of gold, the valuation ofgold to $35 an ounce. Because
what was happening at that pointin time, the amount of dollar
bills they could create waslimited by how much gold the US
government had. And by raisingthe value of gold, they could

(05:28):
print more money. So essentiallywhen they did this, they were
devaluing the money that youalready had in your possession.
They had taken away yourprecious metals and made your
money worth less. So in essence,you'd have had to give them more
of your money for a chocolatebar, even though the cost of it
didn't really go up, it was justthe value of your dollars went
down then. So from 1934 on to1971, well beyond 1971, it was

(05:56):
illegal for citizens tophysically possess gold, US
citizens. In December 1971,President Nixon took us off the
gold standard and put us onwhat's called a fiat standard,
which basically says, a fiatstandard says the government
tells you how much your money isworth. In other words, your

(06:16):
money is not backed by anything,it's just backed by the ability
of your government to tax andmake it valuable.
And that happened in 12/31/1971.It shook up the world economies
because the world kind of leanedinto The US and the fact that we
went off the gold standard wastraumatizing to the world

(06:39):
economies at that point in time.Seventies were a difficult
economy, it was a hard time tomake a living. Then in December
1974, 12/31/1974, President Fordmade it legal for you to possess
gold again. And so that's alittle bit of the history of

(07:01):
gold in The United States.
And to give you some dollarhistory of it, this one ounce of
gold was worth 2,067 in 1933,Then when the government had it
all or all that people disclosedto them, they raised the value
of it to $35 an ounce. Around1971, when president Nixon took

(07:26):
us off the gold standard, it wasabout $40 an ounce. And then
with the resulting inflation ofthat and other decisions that
were made in 1974, this wouldhave gone up in value to 185 to
buy this thing. Excuse me, 1980,was the most recent peak before

(07:52):
now, this same coin would havecost you $850 And then today,
10/07/2025 gold earlier todaycrossed over $4,000 an ounce,
which would have said this samecoin was worth $4,000 an ounce.
And what that has basicallyshown is that the value of the

(08:15):
dollars, the US dollars, hasdeclined dramatically.
So if you're going to put adollar in your drawer and leave
it there, it's going be worthless and less and less. You
might have experienced that ifyou traveled to Mexico twenty
years ago and then wanted totake that money back with you to
Mexico, you would have seen thatsame devaluation. So the
question is, why would my friendphysically possess this piece of

(08:39):
gold, or even crazier, thispiece of gold? And the reason
one might physically possess ithistorically, one is a distrust
of the local government system.If you say lived in Venezuela
where the currency is worthbasically nothing, and you

(08:59):
needed to have an exchange,having something that is
universally accepted as value ismuch more palatable to people
than to just have the localcurrency.
That's a reason. It's easytransfer. If this was mine, I
could give it to Amanda andnobody would even know other

(09:19):
than you guys watching that thistransfer took place and it's not
trackable. It's just like thecoins in your pocket are not
trackable of the transfer ofthat money. So why not
physically own this?
A reason to not physically ownit is this 10 ounce one today
would have crossed over $40,000Nobody knows besides you guys as

(09:42):
I'm recording this, that I wasable to borrow this and have
this $40,000 before this ispublished. It'll be back in the
hands of the rightful owner andthey'll secure it however. But
there's a safety issue with it.There are storage costs. If you
want somebody to store it foryou, it's going to cost some
money and you'd have to paythat.
It's difficult transportingthis. I was reading on the TSA

(10:04):
yesterday, what I'd have to doif I jumped in an airplane with
this and you have to give themsome advance notice and give
them the idea of how you gotthis and it came into your
possession, what you're going todo with it. And it's relatively
illiquid. And when I say it'srelatively illiquid, let me show
you the history of the US dollarvaluation of gold here. If you

(10:30):
look at the history of this, itgoes nowhere for long periods of
time.
This goes all the way back to1925, goes nowhere. The blue
line is the real valuation andthe orange line is that affected
by inflation. And so the blue,can see this peaking of the
value of gold back in the 70sand into the 80s. And then the

(10:52):
most recent rallies of gold, youcan see that going on there. But
then if you put the inflationaryvalue of it there, you can see
that today the inflationaryvalue of gold is hit an all time
high.
And so today, that's what goldhas done in a historical basis.
But notice the angles here, thatthe angles are exact same angle

(11:16):
up as the angle down. And sogold historically doesn't go
anywhere for long periods oftime until it spikes. But then
when it spikes, you'll see thatit comes right back down on the
same angle. So that's thesharing of that for you.
So then that's the picture ofgold and why you might not want

(11:42):
to physically hold it for toolong. Because if it spikes up
and it hits one of those peaks,you're going to have to act
quickly with it to get ittransferred. Not only that, you
have to pay with physical gold,you don't have ordinary capital
gains rates. You have to pay acollectibles tax rate, which
basically treats your gains,your long term gains on gold as

(12:06):
ordinary income, it's treated asordinary income until you get
into the marginal tax bracket of32%. And then once you cross
over into the marginal taxbracket of 32%, then the maximum
tax rate on your gains oncollectibles is 28%.
So what I would tell you todayis that if you own physical

(12:30):
gold, it's a good time to betalking to your advisor about it
and for strategies with it. Astrategy of why you might want
to have it if you don't trustyour government, is you can
diversify your gold by allowingothers to take physical
possession of it and hold it foryou for safekeeping. And if you
had 20 relatives and you gavethem 20 ounces of gold, they

(12:51):
could hold that 20 ounces ofgold in 20 different places. So
you have the security of nothaving all your gold in one
place. If you need some helphaving somebody professionally
store it for you, we've usedFidelitrade, fidelitrade.com
over time.
And this is their website andthey historically have good

(13:17):
prices on gold. You can see downhere that they're quoting the
$3,962 to $4,000 for an ounce ofgold, or if it's the American
Eagle, it's $3,993 to $4,118today. And so the Dela trade is
a good place to get informationon how to secure gold. But
again, if you transfer that goldto a reservoir like that, and

(13:40):
you have the physical goldbecause of the distrust for the
government, you lose some ofthat original motive for having
that. So in closing, I'd tellyou, if you want something
interesting to do, go check outthe origins of that old movie,
The Wizard of Oz.
Did you ever know that a lot ofit was written about the same
idea that I'm talking about, thedistrust of government and the

(14:03):
valuation of gold. And theWizard of Oz, O Z is an
abbreviation of the word ounce,which is one ounce is the
American Eagle. Thanks fortaking time to hang out and make
today today a great day.