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The War on Cash Hates Gold: "Experts" Forget Gold Has Outperformed Stocks For 40+ Years

Warren Buffett once noted, Gold doesn’t do anything “but look at you.” It doesn’t pay a dividend or produce cash flow.

 

As someone who’s devoted his life to increasing his wealth, Buffett should know better than to say this because the fact of the matter is that Gold has dramatically outperformed the stock market for the better part of 40 years.

 

I say 40 years because there is no point comparing Gold to stocks during periods in which Gold was pegged to world currencies. Most of the analysis I see comparing the benefits of owning Gold to stocks goes back to the early 20th century.

 

However Gold was pegged to global currencies up until 1967. Stocks weren’t. Comparing the two during this time period is just bad analysis.

 

Indeed, once the Gold peg officially ended with France dropping it in 1967, the precious metal has outperformed both the Dow and the S&P 500 by a massive margin.

 

See for yourself… the below chart is in normalized terms courtesy of Bill King’s The King Report.

 

 

According to King, Gold has risen 37.43 fold since 1967. That is more than twice the performance of the Dow over the same time period (18.45 fold). So much for the claim that stocks are a better investment than Gold long-term.

 

Indeed, once Gold was no longer pegged to world currencies there was only a single period in which stocks outperformed the precious metal. That period was from 1997-2000 during the height of the Tech Bubble (the single biggest stock market bubble in over 100 years).

 

In simple terms, as a long-term investment, Gold has been better than stocks.

 

Talking negatively about Gold is just one of the means the elites have of “trashing cash” or physical money that can be kept outside of the banks.

 

You see, any form of capital that can be kept outside of the financial system is a major problem for the banks. The financial system thrives on the use of digital currency in the form of loans that can be used as collateral on derivatives trades.

 

Consider money market funds.

 

A money market fund takes investors’ cash and plunks it into short-term highly liquid debt and credit securities. These funds are meant to offer investors a return on their cash, while being extremely liquid (meaning investors can pull their money at any time).

 

This works great in theory… but when $500 billion in money was being pulled (roughly 24% of the entire market) in the span of four weeks, the truth of the financial system was quickly laid bare: that digital money is not in fact safe.

 

To use a metaphor, when the money market fund and commercial paper markets collapsed, the oil that kept the financial system working dried up. Almost immediately, the gears of the system began to grind to a halt.

 

When all of this happened, the global Central Banks realized that their worst nightmare could in fact become a reality: that if a significant percentage of investors/ depositors ever tried to convert their “wealth” into cash (particularly physical cash) the whole system would implode.

 

As a result of this, virtually every monetary action taken by the Fed since this time has been devoted to forcing investors away from cash and into risk assets. The most obvious move was to cut interest rates to 0.25%, rendering the return on cash to almost nothing.

 

This is just the start of a much larger strategy of declaring War on Cash.  The goal is to stop people from being able to move their money into physical cash and to keep their wealth in the financial system at all costs.

 

We've uncovered a secret document outlining how the Fed plans to incinerate savings. In it, the Fed detailed three policies it would impose during a major financial crisis. They were:

 

1)   Cut interest rates to zero (check)

 

2)   Launch QE (check)

 

3)   Impose a carry tax on physical cash or ban it outright (coming soon).

 

We detail this paper and outline three investment strategies you can implement right now to protect your capital from the Fed's sinister plan in our Special Report

Survive the Fed's War on Cash.

 

We are making just 100 copies available for FREE the general public.

 

To pick up a copy…

 

Click Here Now!!!

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

For more investment insights, swing by our FREE e-letter: www.gainspainscapital.com