Over the weekend, President Trump put out a very surprising tweet, quoting a centuries old saying that has been consistently used to remind citizens of the power of gold:

“He who has the gold, makes the rules.”

The Network Effect in business may be the most powerful in wealth creation. The network effect can literally be the difference between billions in wealth and complete failure. It is the simple concept that the more people who use or subscribe to something, the more valuable that something becomes. History is littered with stories of great technologies that ended up worthless because they did not command leading market share, while inferior innovations such as the VHS video recording system unlocked tremendous wealth because it was used by the masses. Think about how ubiquitous this rule has become—the network effect has made all the difference, revolutionizing cellular networks, the energy sector, and has shaped our collective practice of health.

As a form of money that pre-dates man’s fall from the garden of Eden, nothing has a history like gold in finance. Gold is ingrained in the cultures of Asia, where the word for money in both Japanese and Chinese incorporates the symbol for gold. No other currency can compete with that network effect.

Gold is the money that all nations in the world agree to accept in trade. That is why the ancient saying that Trump quoted continues to have relevance on the global stage of finance, especially for the 95% of the world that is not American. The world is grappling for a currency that everyone is comfortable with, not wanting to use dollars as a reserve for all of their wealth.

Gold alone stands in the abyss for numerous nations preventing commerce from decaying into the brutal pain of barter.

Trump seems to be saying that he is comfortable America has its gold at Fort Knox and that the concerns Americans have harbored about the lack of gold auditing can be put to rest.

Is he making a statement to other nations about being in a position of negotiating leverage having their gold as well? Time will tell.

For the world’s most powerful, the reality that they do not have their physical gold within their borders is a concerning realization.  Nations are uniformly voting with their wallets that gold is what’s next as they pony up, increasing their gold allocations within their national reserves. Germany shocked the world, asking for its gold to be returned to within its national borders, a clear vote that it does not trust financial or paper gold.

Ironically, this is going on while America’s largest financial firms desperately try to keep clients’ assets from fleeing their outdated business models.  Large advisory firms stuck in yesterday’s paradigm are pushing families to express gold allocations via derivatives. The largest of these derivatives, the ETF with ticker symbol GLD, has now crossed the $100 billion mark signifying that investors are asking for gold but advisors are (so far) successfully keeping families in gold derivatives. The vast majority, if not entirety of that financial gold, is held in the UK and American investors cannot demand that their gold be brought to America let alone delivered to them. Americans who awaken to the benefits of physical gold must first sell ETF’s, such as the GLD, and convert their derivative gold into the physical.  As demand rises for gold, that will become more difficult to do with increasing delays and costs that are consistently underestimated by financial advisory firms.

How can fiduciaries and advisory firms not be overly concerned about the integrity of such financial gold products like these ETFs?

We already witnessed a de facto default from London, which could not deliver the physical gold to its owners in a timely manner. Now, advisors are not even questioning where the gold is coming from with this explosion in AUM at ETFs such as the GLD.

As the steward of your family’s wealth, and the person whose decisions financial history says will impact your children and grandchildren, how can you not have a sufficient allocation to physical gold to protect your wealth in this environment?

Central banks are agreeing with our math – they are stating the finance is clear.  Looking back over the last 100 years, investors have wanted approximately a 20% gold allocation to optimize portfolios. If any advisory firm tells you that you want less than a 5% allocation, ask them to show you their math. Chances are they haven’t done the calculations and are just using soundbites to keep clients invested with them.

While the global network effect of gold is without peer, Americans who have been so blessed to grow up with the dollar as the world’s envy have forgotten the critical role gold plays in portfolios. However, as we write this Wednesday evening with gold giving us a wonderful pull back to buy into down $100, the news has broken that the state of Florida is again taking a leadership position within the United States. Building on the growing number of states who are now taking matters into their own hands and positioning themselves so that gold and silver will be recognized as real money, Florida has done the same.

The Florida House of Representatives advanced HB 999, which designates gold and silver as legal tender in Florida. If it passes the Florida Senate as expected, gold and silver will again be recognized as real money in the Sunshine State. Money has been flowing into Florida in recent years and this bill stands to only accelerate that as money flows to where it is well-treated.

Think about the enormous implications of what this means. Gold, unchallenged in financial history with its track record of preserving wealth and giving liquidity for millennia, has been out-performing far riskier assets, such as stocks, bonds, and many flavors of real estate over a broad swatch of time periods. 

And while equity investors long lamented the preferred tax treatment real estate has received with 1031 exchanges, allowing real estate investors to immediately roll proceeds from one sale into a new property without paying taxes on real estate gains, America is moving closer to returning gold to the ultimate tax position.  

While there is no guarantee this will play out, as states remember the golden rule that gold is the world‘s premier form of money, liquidating your gold may not create any taxable implication.  This movement seeks to return gold to its constitutional mandate as money - just as there is no tax levied on citizens when retrieving dollars from a bank, if this movement takes hold, there may not be any tax when withdrawing gold savings to buy homes, stocks, or whatever else a family desires.  As the Florida filing explicitly stated this week:

The purpose of this bill is to define and enact the constitutional right to declare gold and silver as legal tender, eliminate the tax burden, and make it a functional means of transaction between willing parties.

Imagine the difference in relative returns between gold and other assets if gold’s status as currency is restored as the Constitution mandates?

We believe this is the direction we are heading and is yet another major reason investors should have historically appropriate allocations to gold and silver.

If you didn’t see the news, while Wall Street and the media talk incessantly about a pending China tariff settlement, markets rallied. However today (Wednesday), Treasury Secretary Scott Bessent explicitly stated that he does not have a timeframe for any Chinese tariff settlement and said that such an agreement is like likely 2 to 3 years away if it occurs.

Could we be witnessing the media being paid off to elevate equity markets, so that insiders, and the elite are able to sell their positions more profitably?

That is our guess as the tariff obsession in the media is reminiscent of the corona Blitzkrieg that proved so completely false.

Tariffs are not the issue and appear to us to be the air cover for another end, but Bessent’s important comments again argue for investors to quickly move into gold and silver allocations. The Treasury Secretary himself has said that gold is his largest personal allocation. What do you think he is looking at? In a recent interview with Tucker Carlson, the Treasury Secretary dispelled the notion that he was not supportive of gold and went so far is to suggest the “Gold bug” label that is associated with him, is appropriate. Bessent, a self-made billionaire currency trader, understands the role of gold as the world’s premier currency. Bessent’s perspective should matter more than most of Wall Street’s in guiding your family’s investment allocation. Bessent has said we are on the brink of a new financial paradigm and it is hard to envision that playing out in a way that will be incrementally favorable for dollars, CDs, bonds, annuities, life insurance, and most dollar denominated assets.

Beyond the laws of finance and financial history, remember that gold is the only asset the Bible counsels investors to allocate to in order to grow wealthy. Under normal circumstances, it appears the Bible would suggest a 15% allocation to gold, but in our opinion, wisdom would guide to a higher number today considering the valuations alternative assets trade at currently and thee risk to the dollar’s ability to preserve purchasing power.

The power of gold.

It has protected families through every type of adversity imaginable. If like many Americans, you have a significant portion of your wealth in your 401(k), IRA, or other retirement plans, understand that you can shift your retirement assets into physical gold without needing to come up with any cash to do so. This reallocation can be done in a tax-deferred manner. Note also that our retirement solution was voted top among US-based physical gold dealers in a third-party study where gold dealers were analyzed at the client trade level.  Each member of our retirement services team who interacts with clients are believers and patriots, people you will like interacting with, and who will take care of all the details to ensure that your transition to physical gold is accomplished to protect your family’s tomorrow.

And if you would like to sell your gold or silver, we would welcome buying all that you have no matter where you purchased it. Whether it is broken jewelry or thousand-ounce bars, we will make the process quick, easy & lucrative for you. 

Call us at 610-326-2000. We look forward to getting to know you and your family. 

God bless and God bless America. 

Past performance is not indicative of future results.