A Safe Haven More Valuable Than Gold

This is what I saw when I woke up on Thursday morning…

Upon reading that headline, I knew it was going to be another busy morning for traders looking to profit from the news and another stressful day for investors who are tired of watching their retirement funds dwindle behind the backdrop of Fed manipulation.

And, of course, the obligatory “I told you so” comments from gold bulls made their appearances on Twitter (now X), Facebook, and LinkedIn too, complete with links to gold coin dealers and junk jewelry hustlers. 

Now, while there’s no denying that gold has historically served as a trusted hedge against inflation, it’s not a panacea and it’s definitely not delivering the way all those gold peddlers would have you believe.

Journalist Brett Arends opined on this back in 2016, and he made some pretty valid points regarding the value of gold:

• Gold was demonetized in 1973, when the United States government formally abandoned the gold standard (although Switzerland retained a version of a gold standard until 2000), so any arguments for gold as a “safe haven” that depend on data from before 1973 are based on a flawed premise.
  
  
• Gold lost 23% of its value during the 1980s, even in nominal terms, before counting inflation.
  
  
• Gold lost 29% of its value during the 1990s, also before inflation.
  
  
• The further the gold standard recedes into history, the less power it has for those still investing.
  
  
• Gold has “worked” less and less as crisis insurance as time has gone on. It wasn’t that great to begin with either. In the stock market crash of 1987, it rose all of 5%. In the financial crisis of 1998, it rose 2% — after first falling. And in the financial crisis of 2008, it failed completely as any kind of safe haven, falling as much as 30% as desperate investors dumped everything, including bullion, to raise cash.
  
  
• Gold’s long early history as “currency,” which dates back thousands of years, is certainly interesting, but it’s irrelevant financially. It predates the rise of modern nation states, laws, banks, and communications. The conditions that drove merchants to buy and sell with gold back then no longer exist.
  
  
• The main appeal of a “safe haven” is that it doesn’t depend on anyone else. However, the main driver of the price of gold seems to be retail demand, both through exchange-traded funds and in emerging markets, and that too means it is more likely to be volatile than “safe.”

I also like what analyst David John Marotta said in response to Arend’s analysis:

Properly speaking, gold shouldn’t even be called an investment. “Investment” describes something that pays you money. Stocks are an investment because future earnings pay you back in dividends. Bonds pay interest. Rental properties collect rent. Gold doesn’t appreciate enough to give you a return. It is more accurate to call it a store of value.

A safe haven should appreciate at least by inflation and have a very low volatility. With high volatility and low levels of appreciation, gold doesn’t satisfy either of those criteria.

Those seeking safety in their investments should take what Marotta said to heart as his analysis is sound.

Indeed, a “safe” investment is one that not only comes with low volatility but also appreciates at least by inflation. Although I would argue that’s a pretty low bar… especially when you consider that there are plenty of “safe” investments that can offer low volatility and appreciate more than inflation. 

Take private solar royalties, for instance, which deliver monthly cash dividends on solar power plants all across the globe.

These are particularly favored by some of the world’s wealthiest individuals, including Elon Musk, Jeff Bezos, and Warren Buffett, because not only do they offer more safety than stocks but some of them offer internal rates of return in the double digits.

One of my favorites is this solar project in Brazil that could potentially put as much as $318,000 in your pocket starting with just $500. 

Check it out:

If you double your initial investment to $1,000, you’re looking at an estimated take-home of $637,568.

You could never earn that with gold.

Don’t get me wrong; I’m not saying owning some gold is a horrible idea. However, if you’re banking on gold for your retirement, you’re going to be eating a lot of ramen and drugstore tuna in your golden years. 

Private solar royalties, on the other hand, will not only provide steady gains for up to 20 years, but those gains will exceed inflation — not just match it. 

And if you don’t believe me, just look at the numbers for yourself.

No, private solar royalties aren’t going to make you as rich as Elon Musk or Jeff Bezos, but they will provide you with steady income for decades while bolstering the value of your retirement far more than gold ever could. 

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.

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