Latest Dispatches from the Bullion Room
A Brief, Entirely Unsolicited History of Gold, From Someone Who Owns Quite a Lot of It
Gold has been mankind's most treasured metal for over six thousand years. The ancient Egyptians believed it was the flesh of the gods, which, frankly, explains a great deal about how our family treats it at the estate. The Romans minted gold coins. The Spanish looted entire civilizations for it (a practice that, while ethically complicated, at least showed initiative). The Californians quite literally panned for it in rivers, which sounds like something one does on a camping trip but turned out to be rather economically transformative.
In 1971, President Nixon — a man who would not have been admitted to the Winslow Club, bless him — took the United States off the gold standard entirely. Gold prices, freed from government oppression not unlike a debutante escaping her chaperone, promptly skyrocketed. Gold in 1970 was approximately $35 an ounce. Today it sits at over $3,000. Father always said that government interference ruins everything. Father, as usual, was correct.
"My dear fellow, I don't check the price of gold. I simply assume it's up, pour myself a bourbon, and ring for Higgins."
— Thurston Howell III, Castaways' Quarterly Review of Personal Finance, 1965
How to Invest in Gold (For the Uninitiated)
There are several ways to invest in gold, most of which are perfectly acceptable, and one or two of which are frankly embarrassing. We list them here in descending order of social respectability.
Physical Gold Bars & Coins
The most gentlemanly option. Purchase gold coins, ingots, or bars from a reputable dealer and store them in a vault — or, if you are of the old school, behind the third portrait of your grandfather in the east wing. Do not store under the mattress. The housekeeping staff have enough to gossip about.
Gold ETFs
Exchange-Traded Funds such as GLD or IAU allow you to own gold without the inconvenience of actually touching it. A perfectly modern solution, though Father would call it "owning a receipt for a receipt." He was not entirely wrong. Still: highly liquid, low fee, and you never have to interact with a vault person.
Gold Mining Stocks
Investing in companies that extract gold from the earth. Highly leveraged to gold prices, meaning they rise more when gold rises and fall more when gold falls — much like the emotional volatility of a third-generation trust fund beneficiary during a market correction. Proceed with the same caution you'd apply to a doubles partner you don't yet know.
Gold Futures & Options
For those who enjoy suffering with paperwork. Futures contracts allow you to agree to buy gold at a future price — a practice that is either brilliantly sophisticated or absolutely unhinged, depending entirely on what happens next. We include it for completeness. We do not personally recommend it. We've seen what it does to people at the club.
Gold IRAs
Hold physical gold in a self-directed Individual Retirement Account. A marvelous vehicle for the sort of person who likes their tax-deferred savings to have heft and gleam. The government cannot touch it easily, which is, as Grandfather used to say while cleaning his shotgun, "the general idea."
Gold Jewelry (Last Resort)
One supposes gold jewelry counts as "investing in gold" the same way one's collection of vintage Bordeaux "counts" as a retirement plan. Technically true. Delightful at parties. However: resale value is dramatically lower once it has been turned into a tennis bracelet. We mention this not to judge, but to inform. Mostly to inform.
⚠ A Word from Our Risk Management Correspondent
Gold is not without its risks, despite what the tone of this publication may suggest. It pays no dividend. It sits there. Beautifully. Silently. Occasionally it drops precipitously in value for reasons related to "the global macroeconomic environment," which is a phrase used by economists to mean "we're not entirely sure what happened." Please diversify. Not too much. But a little. Higgins, you may pour.
The $100 Investment Table
What would $100 invested in gold at various historical moments be worth today? We've done the arithmetic so you needn't strain yourself. Values updated with live gold price below.
| Year Invested | Gold Price Then ($/oz) | Growth (×) | Value Today | Club Commentary |
|---|---|---|---|---|
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Numerical Truths Worth Knowing
Glossary of Terms (The Abridged Edition)
Troy Ounce
The unit of weight used for precious metals, weighing approximately 31.1 grams. Notably distinct from the regular ounce (28.35 grams), because gold, much like our family, operates by a separate system than everyone else and sees no reason to explain itself.
Gold Standard
A monetary system in which currency is backed by gold. The United States used it rather successfully until 1971, when it was abandoned in favor of "faith-based currency," which works on the same principle as wishing very hard. We remain unconvinced.
Contango & Backwardation
Market conditions affecting gold futures pricing. "Contango" is when futures prices exceed spot prices. "Backwardation" is the reverse. We include these words purely because they sound exactly like characters in a P.G. Wodehouse novel, and we believe that to be worth noting.
"The market crashed, Lovey. But the gold is still there. It's always still there. That's rather the point of gold."
— Thurston Howell III to Mrs. Howell, upon hearing of the 1929 crash (retroactively)
A Brief, Legally Required Disclaimer
Golden Info Is Not Responsible for Your Financial Decisions, Your Cousin Bradley, or the Current State of the Dollar
The content of Golden Info is provided for informational and entertainment purposes only — specifically the entertainment of those who already own a reasonable quantity of gold and wish to feel validated. Nothing herein constitutes financial advice, investment advice, tax advice, or advice of any kind. We are not your financial advisor. We are a website run by enthusiasts of the yellow metal and Cormorant Garamond typography.
Past performance is not indicative of future results. Gold prices fluctuate. Markets are irrational. People are unpredictable. We are not, frankly, sure what year it will be when you read this. Please consult a licensed financial professional before making investment decisions. We mean a licensed one. Not whoever Buffy Cavendish-Fitch met at the Nantucket regatta who "does some things with commodities."