When Should I Sell My Gold? – FRONTIER METALS

When should I sell my gold?

With prices hitting record highs, a lot of people are asking whether they should sell or hold. In this episode of the Midweek Memo podcast, Mike tackles this question, using the example of a luxury hotel that literally tore gold bars out of its floor to sell. He also touches on the Super Bowl, revealing just how much more valuable the silver Lombardi Trophy is this year compared to last.

Mike opens the show, reminiscing about a junior high prank.

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“When I was a kid, someone superglued a quarter to the cafeteria floor at my junior high school. We enjoyed several days of entertainment watching people trying to pick that quarter up.

“A few kids were super-aggressive in their efforts to unstick that quarter. (Keep in mind, this was the 1980s. A quarter went a lot further than it does today. Heck, it might have even been minted before 1965, making it 90 percent silver. If it was so-called ‘https://www.moneymetals.com/buy/silver/junk-silver">junk silver,’ it was definitely worth picking up! The melt value of a pre-1965 quarter right now is about $14.60. Would you pick up 14 bucks? Heck, I would!

“But why am I telling you about a junior high prank?

“Well, I was reminded of this incident by a story I ran across. A hotel in Macau tore up its entire lobby floor to make a little money.

“Oh, by the way, the floor was embedded with gold bars weighing 1 kilogram each.”

Mike notes that the hotel’s move raises an interesting question: when should you sell your gold?

With prices at record levels, a lot of people are rushing out to sell scrap gold or liquidate gold and silver investments to book a profit. The Grand Emperor Hotel in Macau went to extremes to profit from its gold holdings.

“The hotel opened in 2006 and is known for its opulence. The entryway featured a ‘golden pathway’ with dozens of gold bars embedded in the floor. The hotel’s parent company recently announced it removed ‘a number’ of the gold bars and sold them to a refiner, pocketing $12.8 million. The company reportedly liquidated 79kg of gold.”

Mike provides a little history about the hotel and Macau, which is a Chinese “special administrative region” similar to Hong Kong. He then highlights a sentence from the hotel’s statement about the gold sale.

“In a statement, Emperor Entertainment Hotel Ltd said the sale would ‘strengthen the group’s financial position and enable it to invest should suitable investment opportunities arise.’”

Mike says that in his view, the hotel already had a suitable investment — in gold.

“It may have been better off holding onto the metal rather than swapping it for rapidly devaluing fiat currency.”

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Mike notes that a MarketWatch reporter read an article he wrote about the hotel and asked a good question.

“She said, presumably, the gold sale was transacted in Hong Kong dollars. So, am I saying the Hong Kong dollar is devalued — how so?

“Short answer, yes.

“But to be honest, I assumed the transaction was in US dollars. That’s how all the reporting I read framed it.

“What I was driving at is that all fiat currency is being inflated and devalued. We mostly hear about de-dollarization because it’s the reserve currency, but every currency is falling in relation to gold. In other words, it’s not so much that the gold is getting more expensive. It’s the fiat currencies it is priced in that are losing value. This is precisely why central banks are increasing their gold reserves. It’s the only truly stable currency.”

Mike emphasises that given this reality, it’s foolish to sell gold for other currencies.

“This is probably a hyperbolic analogy, but it would kind of be like selling dollars for Venezuelan bolivars. Nobody would do that, right? Because you know that the purchasing power of that bolivar is going to drop, probably tomorrow.”

Mike argues that all fiat currencies are on shaky ground and hammers home the point that governments devalue fiat currency as a matter of policy.

“Every government is buried in debt. Every government wants to spend more than it has. Inflating the currency is the only way to sustain these levels of global debt. In a universe dominated by a debt black hole, you need real money. That’s gold. It’s the only currency governments can’t print and devalue. In fact, fiat systems were created precisely because they can create more money out of thin air. This removes constraints on government spending. Governments devalue their currency as a matter of policy. Keep in mind, the Federal Reserve has a stated 2 percent inflation target. That means the plan is to reduce your purchasing power by 2 percent every single year. That means every five years, you’re losing a little more than 10 percent of your dollar’s value. Why in the world would you try to preserve your wealth in something you know will be worth less next year than it is now? Fiat systems are great for government. They’re pretty awful for normal people who want to save and preserve their wealth.”

All of that said, Mike says there is a little bit of nuance to consider.

“I wouldn’t tell somebody you should never sell gold or silver. If you need to buy something, it makes sense to liquidate your metal, take your profit, and do what you need/want to do. For instance, I have a friend who sold some of his silver recently and made some needed repairs to his house that he’d been putting off. Want to take that European vacation? Sell an ounce or two of gold and go for it. Or even if you want to shift investments – maybe up your risk in the equities market (assuming you’re bullish equities). Although at this point, I’m not sure I would do that, given that gold and silver are outperforming most things. My point is simply, I’m not arguing you should never sell or take your profit. But I would say it’s foolish to just take the profit and then hold on to a bunch of dollars that are going to devalue.”

Mike sums it up this way:

“If you plan to buy stuff, selling gold and doing so makes sense. But just selling gold because the price is high and then sticking fiat currency in your bank account is a dumb move. You’re exchanging good money for bad.”

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Mike closes the show talking about the Super Bowl. He congratulates the Seahawks and points out that Money Metals offers a cool colorized round featuring the Seahawks’ logo. He also points out just how much more valuable the silver in the Lombardi Trophy is this year than it was last.

Mike wraps up the show with a call to action.

“For reasons I’ve discussed on the show, I think the silver and gold bull markets have plenty of legs left. If you’re thinking about getting silver, now might be a good time with the price around $80. On top of that, Money Metals has https://www.moneymetals.com/buy/specials">silver below spot!”