THE DURABLE ASSET : WHY CONTINUED HOLDING OF PRECIOUS METALS PRESERVES YOUR FUTURE
In this month’s blog, Joshua Rotbart, founder and managing partner of J. Rotbart & Co., walks us through his experiences with precious metals consulting – helping clients navigate what to do with their precious metals.
Buying Gold in Hong Kong is a Sensible Strategy
Gold is undoubtedly a precious asset that keeps its value in the long term. Throughout my career in the precious metals industry, I have assisted numerous clients who have inherited precious metals, bars or coins, and wanted to either have them valued or liquidated to enjoy the proceeds.
Inheriting Gold Bars – A Case Study
One such client is Dan (Dan is a pseudonym used for privacy purposes). Dan had inherited 6 kilobars of gold from his parents, which were stored in Switzerland in a private safe deposit box. These bars were purchased in the mid-’60s as Dan’s parents had wanted to secure his future by buying a tangible asset that would stand the test of time.
Dan approached our company with his “newly” discovered gold bars and asked for our assistance. We arranged for a secure vehicle to meet the client at the safe deposit box premises, and delivered the gold bullion to an LBMA approved refinery, in order to authenticate them on his behalf. We at J. Rotbart & Co. managed to turnaround the sale of the gold bars for Dan quickly via our reputable boutique platform and solid relationships in the precious metals industry.
The same precious metals that were purchased by Dan’s parents back in the ’60s, whereby an ounce was worth around $35 US dollars, are equivalent to about $270 considering inflation in 2017 terms; Dan’s gold was sold by us at USD 1,287/ozt., 36 times of what it was worth originally.
Obviously, buying gold was a smarter decision than holding cash. We always, however, compare the performance of gold to other assets to make an informed and holistic evaluations.
The 60’s Fortune 500 Companies – Where Are They Now?
Buying gold in the ’60s versus stocks of the leading companies in the market is a very interesting insight from a long term perspective.
In the mid-’60s, only around 15% of Fortune 500 companies survived the market, most of them went bankrupt, their star had fallen, or they had merged or were acquired by another firm.
The fact that most Fortune 500 companies in the ’60s are gone, merged, or contracted demonstrates that there has been a lot of market disruption, churning, and Schumpeterian creative destruction over the last 50 years. It is reasonable to expect that when the Fortune 500 list is released 60 years from now in 2078, most of today’s Fortune 500 companies will no longer exist as currently configured, having been replaced by transformed companies in new, emerging industries.
The average lifespan of a company listed in the S&P 500 index of leading US companies has decreased by more than 50 years in the last century, from 67 years in the 1920s to less than 20 years today, according to Professor Richard Foster from Yale University and CNBC.
If we look at general market indices and not singular companies, we can see that during these years (1965-2018), gold has risen at 500% from its value factoring in inflation, while the Dow Jones had underperformed by 356%, and the S&P had over-performed very well with a 3,062% rise in value.
So How Do Precious Metals Stand In Comparison?
We can see that for the long term and as a means of preserving wealth, gold performs very well through history and can withstand major financial crises.
It is our opinion that if you wish to secure your family’s future in the safest way, a good option is to look into buying gold, silver, platinum and palladium.
If you would like to learn more about buying gold and/or other precious metals, contact us today.
