Choosing Your Own Financial Destiny: This is Freedom in America

This is the weekend we officially celebrate freedom in America.

One aspect of this amazing freedom is having the right to self-determination—to choose how we live our lives. Americans are known for constantly pushing ahead to new horizons. That’s partly why I am always so puzzled when people stick to the status quo for long-term savings.

But retirement savers may be changing their views on what superior choices are for long-term savings growth. Recent data suggests Americans in growing numbers are beginning to embrace alternative assets, including precious metals.

These less-conventional, alternative options fall well outside the mainstream of traditional investments such as equities, interest-bearing assets, and bank certificates of deposit (CDs). But more Americans than ever are considering them.

Freedom in America includes having the freedom to make just about any decision we want to make for financial best interests. And there now are indications more of us are beginning to exercise that freedom.

Bankrate: Growing Interest in Precious Metals as Long-Term Savings Assets

Unsurprisingly, equities are still long-term savers’ favorite asset. A July 2020 survey at Bankrate asked respondents to name their preferred savings vehicle for money they would not need for at least 10 years, and equities topped the list.¹

But I found the margin of “victory” to be interesting: 28% of respondents. In 2018, just two years before, 32% of respondents chose equities.

The actual survey was conducted between late June and early July of last year. So, the pandemic’s negative effect on financial markets through spring and summer 2020 could have soured respondents on equities. Still, a result that hovers around the 30% mark – and that includes 2018’s figure – implies other assets are crowding the field.

Sure enough, real estate was the preferred choice of 26% of respondents – a close second. Certificates, cash and cash equivalents were third at 18%. Gold and precious metals were fourth at 14%.

But here’s the clincher for Augusta Precious Metals and our customers: According to Bankrate, the choice of metals was up for the second straight year.

Just as with equities, increased interest in metals last year might be connected to pandemic-related economic turmoil. Still, it says a great deal that gold and other precious metals now rank the fourth most-preferred long-term savings options (as per Bankrate).

I believe the increase may also reflect a growing public awareness of so-called alternative assets that has come out of a more-uncertain economic climate.

Global Analytics Firm Preqin: Alternative Assets Are Expected to Significantly Grow

As if Bankrate’s finding was not enough, Preqin, a global research and analytics firm devoted to the alternative assets universe, released a survey that showed 81% of respondents “expect to increase allocations to alternatives” because of “the promise of…diversification and lower correlation with public markets.”²

The same survey found that asset management professionals anticipate overseeing $17 trillion in alternative assets by 2025. That would represent a 60% increase over present levels and a 325% increase over total alternative assets under management in 2010.

“The twin forces of persistently low interest rates and strong returns across asset classes, each with differing risk/return profiles, will push and pull capital to alternatives,” Preqin CEO Mark O’Hare wrote about the survey results.³ In my view, precious metals stand to benefit from these factors.

Underscoring O’Hare’s point is the reality that some of the very best returns by asset class over the last 20 years belong to precious metals…

Analyst: “No Asset Class Has Performed Better Than Precious Metals” Over 20 Years

The Bankrate survey doesn’t tell us precisely why interest in precious metals as a long-term savings asset has been growing over the last couple of years. Part of it is probably the pandemic. Survey results revealed by the New York Times last July while the pandemic’s economic fallout was still profound revealed about half of all Americans were “seriously thinking about buying gold.”⁴

But remember the Bankrate survey described rising interest in metals as long-term assets. Maybe some Americans are turning to gold and silver in part because they’ve noticed metals’ impressive record of appreciation since the beginning of the millennium.

In fact, gold and silver have been top-performing assets since January 2001. From that date to today, the price of silver appreciated roughly 460% and gold climbed 550%.

This performance reality hasn’t been lost on Robert Hartmann, a metals advisor to money managers and banks.

“If you look over a period of 20 years,” Hartmann recently told Eurasia Review, “there is no asset class (apart from cryptocurrencies) that has performed better than precious metals.”⁵

Asset-Choice Freedom Is Worthless Unless It’s Used

Physical gold and silver offer many possible benefits to help savers navigate the increasingly complex economic and savings environment.

Metals’ benefits include a fundamental noncorrelation with popular mainstream assets.⁶ This can be important to achieving diversification.

Ultimately, however, it’s not enough to simply have the freedom to choose assets outside the mainstream. You also have to be willing to buck convention and long-held perceptions of friends, family – even popular financial personalities who believe choosing such assets is wrong-headed.⁷

But bucking the system is very, very American! And more people than ever are climbing aboard the alternative assets train. That makes it easier to embrace these nontraditional savings vehicles for yourself – especially when research shows they could be prudent choices.

Freedom is a great thing. It is, in my opinion, among the best of all things. In the end, however, it only can be of real value if you choose to actually use it.

Happy birthday, America!

¹ James Royal, Bankrate.com, “Survey: Stocks are back as Americans’ favorite way to invest” (July 23, 2020, accessed 7/1/21).

² Preqin, “The Future of Alternatives 2025” (November 2020, accessed 7/1/21).

³ Ibid.

⁴ Danielle Braff, The New York Times, “Where Is All That Gold Being Stored?” (July 28, 2020, accessed 7/1/21).

⁵ Claudio Grass, Eurasia Review, “Precious Metals Are and Always Have Been the Ultimate Insurance” (April 9, 2021, accessed 7/1/21).

⁶ Portfolio Visualizer, “Asset Class Correlations” (accessed 7/1/21).

⁷ Investopedia, “Why Warren Buffett Doesn’t Invest in Gold” (June 25, 2019, accessed 7/1/21).