From Property To Precious Metals: Rethinking Investment Strategies For Future Generations

Monday, 16 September 2024, 2:25 am
Press Release: New Zealand Gold Merchants

Buying gold is a smart way to diversify your portfolio and ensure long-term financial security. But it’s often overlooked. Why?

Tony Coleman from New Zealand Gold Merchants suggests that it could be because we learn our money habits from our parents.

Rebecca Broughton* got her financial schooling from her father. She watched her father John work tirelessly to support a young family from the age of 21. Inheritances or handouts were not available to him, and no one guided or spoke to him about financial management. All he had was his wits, his trade, and his determination to make a better life for his children.

Adding to the challenge, it was the early 80’s. Inflation was at 18%, interest rates of around 20% were the norm and tax rates were high – 48% at its peak. Despite these obstacles, he built his business up quickly and by the age of 28 had acquired two freehold homes. Initially, residential properties were acquired, followed by commercial, then rural. In the 80’s, John dabbled in the stock market – it was too good to be true – what goes up must come down. Just before the crash, he sold – and another investment was funded.

But the real story here isn’t about John, it’s about how we teach our kids about money. John never mentioned gold to them. Why? His parents never mentioned it to him. It simply was never an option for them. Gold was seen as the premise of the very rich and financially astute – of which they didn’t see themselves.

Not surprisingly, John’s children followed the same pattern of investing – property. After John tragically died in an accident on the farm in his mid-50s, none of his children thought to use some of the proceeds to buy gold when it came time to sell the farm. Why would they? They’ve never discussed it before. It just wasn’t on their radar.

Now if they had of, this is exactly what they could have gained. At the time of the sale, term deposit interest rates were incredibly low and John’s wife didn’t want to invest in another property to maintain. If the family had invested 10% of the proceeds in gold, they would have made a lot more than the current 3% return at the bank. On 16-08-19 the gold spot price was just under $2350. On 16-08-24 it reached over $4095.

If we want our children to get ahead, no matter the vocation they choose, understanding money, currency and value is paramount. Most would not know that the majority of money is produced by banks, when a client asks for a mortgage, they create a mortgage security over the property, then credit your account with the funds, and debit the bank’s ledger which shows as an asset, they never had the money, they created it out of thin air. Banks hold very little in available funds and can be susceptible to bank runs, they play a confidence game. We have seen a number of high-profile banks collapse in recent years including Swiss giant Credit Suisse and Signature Bank. We must all be aware of the risks we now face as the global monetary system comes under pressure. There is systemic risk in holding “funds in the bank” as the money in your account is not yours, you are an unsecured creditor of the bank, with gold there is no counterparty risk, it is yours to keep.

Regarding Rebecca’s approach with her children, she’s been talking to them about gold investments. Coins are a good place to start, especially ones with stories like the Britannia Gold and South African Mint. They get a coin every birthday and she will keep them in storage until they’re 18. Considering they’re quite young, they’ll have a decent nest egg by then. However, more importantly, they will have learned that gold is a solid investment option.

About New Zealand Gold Merchants

New Zealand Gold Merchants has been trading bullion in NZ for over 50 years.

“Our history is steeped in innovation, as we are New Zealand’s leading precious metals refinery and bullion trading company,” says Managing Director Tony Coleman.

“In addition to trading bullion, we refine our own. With smart technology at the heart of our business, we ensure our production processes are as efficient as possible so that we can deliver the best metal possible to our customers.

Despite our expertise in the field, our relationships with our customers, many of whom have been with us for decades, are everything to us. We operate as a tight-knit, passionate team. We have a long history in the industry and hold strong to our core values of integrity, professionalism, and respect. As well as offering sound and practical advice for buyers and sellers, we assist new investors and simplify the trading process.”

Tony Coleman is Managing Director of New Zealand Gold Merchants.

*not her real name

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