Gold Fever: Myths, Memories, and Market Reality

Gold Fever: Myths, Memories, and Market Reality - Guest host Jeff Perry sits down with
senior portfolio manager Brian Regan to unpack why gold still captures investors’ imaginations
and also their dollars. From the historic change in the Gold Standard at Bretton Woods and the
Nixon shock to today’s headlines and Costco’s unexpected bullion boom, Jeff and Brian explore
the real drivers behind gold’s rise, the role of investor psychology, and the facts (and fictions)
about the link to inflation and the dollar. Plus, the geopolitical twists that may shape where gold
goes next and why it might be more speculation than an actual safe haven.
#financialplanning #investing #gold #retirementplanning #speculation #goldfever
#financialrisk #illiquidity
See Brian’s article on Gold at the link below:
https://www.wealthenhancement.com/pdf/gold-beyond-the-myths

Click the link below to register for our upcoming webinar, “Don’t leave a digital mess.”
https://register.gotowebinar.com/register/6040334700710880088

For more information or to reach TEAM AMR, click the following link:
https://www.wealthenhancement.com/s/advisor-teams/amr

 

Episode Transcript

(00:00):
Welcome to Something More with Chris Boyd.
Chris Boyd is a certified financial planner, practitioner,
and senior vice president and financial advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.

(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Welcome to another episode of Something More with
Chris Boyd.
My name is Jeff Perry.
I am a financial advisor who works with
Chris Boyd, and Chris is on vacation today,

(00:42):
so I have the privilege of sitting in
for him.
And joining me is our senior portfolio manager
for our team, Brian Regan.
Thanks for joining me, Brian.
Good to be here as usual, Jeff.
Hope you're doing well today.
I'm doing great.
Summer is coming to an end.
The official summer, anyway, is coming to an
end.
The kids are getting back to school or

(01:03):
off to college or whatever the kids are
doing.
And so it's a time for transitions, I
guess, into the fall.
Any changes in your world?
My daughter is not yet in school, so
that's a challenge.
She's off at her grandparent's house in New
Hampshire right now, having a great time.
My son is luckily or unlucky, depending on

(01:25):
how you view the pay I have to
send them, and still in daycare.
So that's fun and reliable.
But yeah, it's exciting.
My daughter's heading into kindergarten, so it's going
to be an interesting time in our lives.
Yep, they certainly do grow fast.
I can't believe that I'm saying this, but
last weekend we helped move our granddaughter, Faith,

(01:47):
into college.
She's in New Hampshire at a college and
running on the college team and experiencing all
those new things about living on her own
and starting this next part of her life.
So exciting times for her as well.
That is exciting.
I love college.
I wish I could go back.
We always want to go back to things

(02:08):
that we didn't appreciate when we were there.
And I did tell her that.
I know it meant nothing to her, but
I did tell her these could very well
be the best times of your life.
I actually think I did appreciate it.
It doesn't mean I don't miss it.
It was great at the time, and I
just think fondly about it.
Well, good luck to all the students returning

(02:29):
to school and the parents who are dealing
with emptiness or the challenges of daycare and
childcare and grandparents and all that.
A lot of things change this time of
year.
Brian, today I wanted to talk about an
article that you wrote, and it's also a
subject that comes up with our clients, I
don't know, more frequently than I might think.

(02:49):
And it's the subject of gold, meaning should
I buy gold?
Should I have gold in my portfolio?
I think you wrote this article in part
because you've gotten so many requests from clients
to answer their questions about gold.
Is that right?
Yeah, it comes up all the time.
So I actually just titled the article, I

(03:10):
get asked a lot about gold.
I was thinking about titling it, and I
was like, I don't know, this seems to
work.
This is pretty simple, but it's the truth.
It's why I wrote the article.
It's my two-page response to what I
think is a good time to invest in
gold or when I think it's an opportune

(03:31):
time.
And it might be what I find interesting,
and I think it flies in the face
of a lot of the common assumptions that
people think or a lot of the common
reasons that people come to me for investing
in gold.
I think oftentimes they're far off base or
they haven't thought of...
Whenever I go into any investment, I like

(03:52):
to think, well, why do I think it's
going to go up?
And when would I want to get out
of it?
Under what circumstances?
And I think that's not always thought through
from the folks that come to us, and
that's what this article was trying to hit
on.
On a personal basis, I have never, even
in my younger years when I was just

(04:13):
starting out and accumulating assets, all through my
savings years and various careers, and now getting
near the end of my professional careers and
thinking about the decumulation phase, I never...
I mean, I know gold exists as an
investment, but I've never thought about it.

(04:34):
Should I have it in my portfolio?
And I see the times that now that
I've been working with you guys for the
last five years, I hear it from clients,
so I think about it a little bit
differently, but the times I see it most
and think about it for a second is
when I see those TV ads that are
promoting, sometimes late at night or sometimes on

(04:56):
partisan news channels that are, after one segment
of fear-mongering, I'll equal distribute to left
and right, or when I see it in
the context of some retail show selling gold
coins to the public.

(05:16):
And so I see that, but I just
never really thought it should be part of
someone's portfolio.
When you were studying and throughout your years
of managing money, has it ever come to
you like, this is an inappropriate asset to
put in my client's portfolios?
Yeah, there was a time, there was a

(05:37):
good stretch from, I don't remember, the summer
of 2019 to probably the end of 2020,
when we did have clients invested in gold.
And the way I look at it, we're
kind of jumping to the end of the
article, but that's fine, all around.
The way I look at gold is as
a currency, a global currency with a perpetual

(06:01):
0% interest rate risk.
So put that into contrast, all the other
currencies in the world have a government bond
associated with them, at least all the developed
currencies in the world.
So if you hold dollars, you can effectively
get a four and a quarter, 10-year

(06:22):
risk-free rate of return right now by
taking those dollars and investing them in treasuries,
which is very easy to do.
You cannot do that with gold, right?
You can't get a risk-free rate of
return.
It doesn't have any cash flows associated with
it, but it does have historical roots as
a currency, and it's still viewed that way
by the capital markets as a store of

(06:43):
value.
And we can get into how that's been
put in overdrive lately and why I think,
when we talk about why I think it's
gone up in value as of late.
But when interest rates, all else equal, right,
and that's always a key phrase when we
talk about anything, there's usually a lot of
variables pulling on different assets throughout the world.

(07:05):
But all else equal, if interest rates are
falling, global interest rates are falling, then gold
becomes more competitive on a relative basis, right?
Because it's always zero.
So if we go from a 4%
interest rate on the 10-year to a
3% interest rate, well, then gold just
became a little bit more competitive versus the
dollar.
And the more you have that throughout the

(07:27):
globe, the more competitive gold is.
So if you remember back when we had
very low and even negative interest rates in
parts of the globe, and then the Federal
Reserve started cutting, and that was in 2018
to 2020, that's when we were in gold.
And that's the logic I use that makes
sense to me when investing in gold.

(07:48):
And gold doesn't have consistent, strong correlations to
much.
So you really need to think about it
in the context of something that makes sense
to you, so you know that you can
consistently and realistically get in, and then ultimately
get out at a time that makes logical
sense to you.

(08:08):
It kind of goes back to just knowing
what kind of asset you own and why
you own it, right?
That can lead into, when people come to
me and they want to buy gold, why
do they want to?
I mean, there's different reasons, sure.
But isn't the primary belief by many, it's

(08:30):
a hedge against inflation?
It's going to protect you.
Yeah.
So that's, you know, jumping up to the
top of the article.
I'm all around.
Yeah.
It's good.
It makes me think, right?
The number one reason why people come is,
I think they're afraid of inflation.
And, you know, there is some recency bias
there because we experienced some pretty severe inflation

(08:53):
just a few years ago, and it's still
relatively high.
You know, we're talking 2.9% on
core CPI and 2.7% on the
headline CPI.
So it's still fairly high.
And you couple that with the fact that
gold's been on a bull run.
You know, I kind of understand why people
are putting one and one together and thinking
that's the reason.

(09:14):
But the real reason why people think that,
and it's always seems to be people of
a certain