ArcaMax

Gold has now traded at over $3,000. It’s a shame the “original gold bug,” James Dines, is not alive to see his forecast come true. Dines was a noted author, editor and precious metals mining expert, and this column is written in his memory — and in appreciation of the lessons he taught me so many years ago.

To sum up his philosophy, Dines famously said (and remember this was 50 years ago in a different social era), “When my girlfriend asks for a bracelet made out of paper, I will know paper is as good as gold!”

Dines was fired from his first job as a securities analyst for forecasting that gold would one day hit a price of over $400 per ounce. At the time of that forecast, in 1960, gold prices were fixed at $35 per ounce by the U.S. government, and Americans could not own or trade gold bullion freely until December 31, 1974.

Dines was always ahead of his times. In fact, over a decade ago he also declared himself the Original Crypto Bull!

Going back to ancient times, gold has served as a safe haven and a store of wealth, against government abuse of the printing press: Inflation. Do you know why our coins today have ridged edges? It’s because in Roman times, the unscrupulous would clip of file the edges of gold coins and keep the scraps of the precious metal!

“Rumpelstiltskin” is the Grimms fairy tale telling of the gnome who tried to spin straw into gold, reflecting the alchemists’ centuries-old desire to create gold.

But, though more gold may be discovered and mined, no one has been able to “create” gold. There is a limited, finite supply of this precious metal. And it is indestructible.

The relative scarcity (compared to paper currency) and indestructibility of gold has made it the go-to investment in times of uncertainty for 5,000 years.

In the inflationary era of the late 1970s, when the U.S. government “printed” money to pay for the Vietnam War and the Great Society, gold finally surged to $850 per ounce. Fluctuating wildly, gold finally reached over $1,800 per ounce in 2012. And then, during the financial crisis of 2008, it traded as low as $712 per ounce.

So, is gold a better investment than stocks? It depends on the time frame you choose. Despite our current bull market in stocks, over the last 20 years gold has actually outperformed the S&P 500. Gold prices have risen about 10-fold since 2000, according to Bloomberg, while the S&P 500 has merely quadrupled.

There are two sides to this gold investing coin. Gold bullion doesn’t pay interest and has storage costs to consider, although gold mining shares do pay dividends. And if you’re considering gold as a haven for an “end of the economic world” scenario, you’ll find that even gold coins are difficult to use to pay for needed goods.

As an investor, you can buy mutual funds that hold shares of mining companies. Or you can trade ETFs that track the price of gold, such as GLD (SPDR Gold Shares) on an instantaneous basis.

For physical gold, you can buy bullion coins valued only for their gold content, or numismatic (collector) coins that are also valued for their scarcity and condition. Use reputable dealers (search at the website of the American Numismatic Association — www.Money.org ). And be sure to store your coins in a bank vault.

Will crypto become the new gold? Certainly, our economic efficiency will be improved by the use of digital currency, based on the immutability of the blockchain. But crypto is a relatively new “invention” compared to gold. And crypto has been tarnished by scandals, thefts of crypto wallets, and its usage to hide criminal global transactions.

Yet crypto enthusiasts point out it shares many of the features of gold: immutability and limited supply. Bitcoin is designed to have a fixed total supply of just 21 million. (That limited supply does not apply to other, newly-created cryptocurrencies.)

Just as gold can easily be converted into all currencies, bitcoin is increasingly used as a medium of transaction in various currencies. And digital access to crypto transactions is a lot easier these days than offering a merchant a gold coin!

Since 2009, when crypto became available to retail investors, its price has fluctuated widely. According to Gold Avenue, since launching, bitcoin prices have been four to five times more volatile than gold, with average intraday price changes greater than 5% in the past three years.

These days, individual investors don’t need a “wallet” at a crypto firm to speculate. Futures and ETFs give you quick access to trading crypto through brokerage accounts. But it remains to be seen whether crypto will serve as a long term store of value as gold has done for 5,000 years.

Notably both gold and crypto share one great characteristic: They are designed to remove holders from the whims of government — all governments — which have historically devalued their currencies to buy the votes of the public. That has become more obvious in recent years. And that’s The Savage Truth.

========

(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2025 Terry Savage. Distributed by Tribune Content Agency, LLC.