In case you hadn’t noticed, the government and central banks are concerned about the stability of the pandemic economy (understandably). As a result, “the people in charge” launched unprecedented fiscal and monetary interventions over the last year or so. And it appears those interventions may continue through the foreseeable future to both support pandemic recovery efforts AND pursue what could turn out to be an expensive political agenda.
A projection last year by the Committee for a Responsible Federal Budget (CRFB) indicated Biden administration initiatives eventually could send the federal debt to an astonishing $30 trillion.1 And that projection excluded the potentially significant impact on the debt of any pandemic relief bills such as the recently passed American Rescue Plan. According to the CRFB, the American Rescue Plan could add another $4 trillion to the federal debt by 2031.2
Unsurprisingly, precious metals have enjoyed both better returns and a warmer embrace by the public recently. As I’ve detailed in other articles, it’s not only individual savers giving metals a hard look these days. So, too, are central banks, U.S. states and even Tesla, one of the world’s most dynamic and relevant companies. Is it possible that gold and silver are on the verge of becoming viewed as core assets in the same way long-popular mainstream assets are so viewed?
One metals expert thinks so. In fact, he goes further, suggesting that not owning metals is an act of outright “negligence.” Sound extreme? Perhaps it is. But a closer look at what he has to say reveals a sentiment clearly shared by a growing number of people around the world lately. They may not view non-ownership of metals necessarily as an act of negligence. But it’s also clear they have a belief in the ability of gold and silver’s potential to reduce the overall risk to their total holdings.
Pro Aurum occupies a prominent space in the German gold market. Under the vigorous and visionary leadership of Robert Hartmann, the company has managed to transcend its profile as a retail precious metals dealer to become the strategic metals partner of several investment advisors and financial institutions. It’s reasonable to imagine Hartmann has seen just about everything when it comes to gold and silver in his capacity overseeing such a comprehensive metals operation. Which is why I find some of his latest public comments about the importance of gold to be so noteworthy.
In a recent interview with Eurasia Review, Hartmann unhesitatingly made his case for the indispensability of precious metals, saying in part:3
Precious metals are and always have been the ultimate insurance. They provide protection both against state failures and against mistakes in the monetary policy of the central banks. Every investor who looks into the history books sees that both have happened over and over again in the past centuries. From that perspective, investing in physical gold and silver is a common-sense precaution and a necessary part of any wealth preservation plan. Investors and ordinary savers ignore this at their peril and the failure to include precious metals in one’s portfolio is pure negligence.
“Gold also plays a crucial role in protecting savings from a loss of purchasing power due to inflation, which is a very real and imminent risk,” Hartmann added. “And that’s what it has been doing since the turn of the millennium. If you look over a period of 20 years, there is no asset class (apart from cryptocurrencies) that has performed better than precious metals.”
For a seasoned metals professional such as Hartmann to suggest choosing not to own precious metals is tantamount to negligence speaks volumes about just how important gold and silver could become in the current climate.
Hartmann is not the only expert who has referenced what he believes is the cruciality of precious metals. Shayne McGuire is the portfolio of manager of the Gold Fund, the first dedicated precious metals fund to operate within the U.S. pension system. He’s spent the last 12 years overseeing that fund for the benefit of the massive Teacher Retirement System of Texas, one of the nation’s largest pension funds. McGuire is another metals expert who I think it can be said has few equals when it comes to experience and perspective. And so, when he speaks as definitively of gold’s significance as Hartmann does, I’d suggest it’s information worthy of a closer look.
A recent Streetwise Reports article about gold referenced a statement McGuire made a few years ago that succinctly details why the fund manager believes gold has become such an essential asset recently.4
Before 2008, counterparty risk was not a consideration if you had the backing of Lehman Brothers or Citigroup or even the largest bank, RBS, or the backing of a colossal insurance company like AIG. Gold is ultimate financial insurance, the only viable and liquid investment asset that is not another entity’s liability, and pension funds are talking about this.
So Pro Aurum’s Robert Hartmann goes as far as to say that failure to own precious metals qualifies as “negligence.” And both he and Shayne McGuire refer to gold as the “ultimate insurance.” Even the most ardent gold and silver fans not long ago might have dismissed such declarations as hyperbole. But now? Precious metals were among the best performing assets during both the Great Recession as well as a highly turbulent 2020. Moreover, as Robert Hartmann noted, they’ve been the best performing assets of the last 20 years, aside from cryptos. Given this record, it’s easy to understand why both Hartmann and McGuire – each of whom possesses impeccable credentials as metals experts – feel as strongly as they do.
1 Committee for a Responsible Federal Budget, “The Cost of the Trump and Biden Campaign Plans” (October 7, 2020, accessed 4/22/21).
2 Committee for a Responsible Federal Budget, “American Rescue Plan Could Set Stage for $4 Trillion of Debt” (March 5, 2021, accessed 4/22/21).
3 Claudio Grass, Eurasia Review, “Precious Metals Are and Always Have Been the Ultimate Insurance” (April 9, 2021, accessed 4/22/21).
4 Peter Krauth, Streetwise Reports, “Gold Is the Ultimate Reserve Asset” (February 16, 2021, accessed 4/22/21).
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