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Master Money

The Gold Rush Is Here


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What’s Poppin’,​
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This is Master Money, where we help you build wealth without selling your soul (or your feet pics).

Here’s what we have on deck today:

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πŸ“— Read: Gold Is at an All-Time High (Should You Care?)

πŸŽ™οΈ Listen: 10 Steps to Get Ahead of 99% Of People Financially (In the Next 6-12 Months)

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Gold Is at an All-Time High (Should You Care?)

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Gold just hit another record high, and financial media is losing its mind. CNBC anchors are breathless. Your uncle is texting you about buying bullion. Someone on Twitter is claiming gold is the only real currency. Mr. T just became the richest man on earth (Ok, that one is not true).

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Here's what nobody's telling you: Gold's rally has almost nothing to do with its value as an investment and everything to do with fear.

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While everyone's rushing to buy shiny metal, let's talk about what gold actually does for your wealth. Spoiler alert: probably not what you think.

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The Fear Trade Explained

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Gold doesn't rise because the economy is thriving. It rises when people are terrified.

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Look at what triggers gold buying sprees: recessions, market crashes, geopolitical crises, inflation scares, or central banks flooding the system with money. Every major gold rally in history has been fueled by some version of "the world is ending."

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During the 2008 financial crisis, gold initially crashed as everyone scrambled for cash, then rocketed higher as fear took over. In March 2020, when COVID crashed markets, gold followed stocks down before rebounding sharply as the Fed slashed rates to zero.

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The pattern is consistent: Gold thrives on uncertainty, not on economic strength or productivity.

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It's the investment equivalent of buying canned goods and duct tape. Useful in a crisis, questionable as a wealth-building strategy.

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Think about what that means. When you buy gold, you're essentially betting that things will get worse, not better. You're hoping for chaos, inflation, currency collapse, or geopolitical disaster to make your investment pay off.

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That's a weird foundation for building long term wealth.

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The Intrinsic Value Problem

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Here's the uncomfortable truth about gold: It doesn't actually do anything.

A stock represents ownership in a company that produces goods, employs people, and generates profits. A rental property houses tenants and produces monthly income. A bond pays you interest. Even cash in a savings account earns yield.

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Gold? It sits there. Looking shiny.

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Gold generates zero cash flow. It doesn't compound. It doesn't pay dividends or interest. It doesn't grow or improve over time. Your return depends entirely on finding someone willing to pay more for it later.

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This is the definition of speculation, not investment. You're buying something hoping the next person values it higher, with no underlying productivity to justify that increase.

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Warren Buffett put it perfectly: "Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

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The entire return from gold comes from price appreciation driven by fear and speculation. That's a fundamentally different game than owning productive assets that generate wealth through cash flow and reinvestment.

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The Performance Reality Check

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Let's look at what actually happens when you own gold long term.

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Over the past 50 years, gold has averaged roughly 7-8% annual returns.

That sounds decent until you realize those returns are heavily concentrated in a few major run ups during crisis periods. Between the spikes, gold often goes nowhere for years or even decades.

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The S&P 500, meanwhile, has averaged 10-11% annually with dividends reinvested. More importantly, those returns compound because you're reinvesting dividends and owning businesses that grow.

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Here's the math that matters: $10,000 invested in gold in 1974 would be worth roughly $500,000 today. That same $10,000 in the S&P 500 would be worth over $1.5 million.

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The difference? Productive assets compound. Shiny metal doesn't.

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Even during gold's best periods, the comparison is unflattering. From 2000 to 2011, gold's epic bull run, it returned about 15% annually. Great, right? Except the stock market has had multiple decade long periods with similar or better returns, without requiring global chaos to justify them.

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What Happens When Markets Crash

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The common wisdom is that gold protects you when stocks collapse. The reality is messier.

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Yes, gold often rises during prolonged downturns. But in the immediate aftermath of crashes, gold frequently falls too. Why? Because when markets panic, investors sell everything to raise cash. Gold gets dumped along with stocks.

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In 2008, gold fell 30% during the initial crash before recovering. In March 2020, gold dropped sharply alongside stocks before rebounding. The "safe haven" narrative works eventually, but not always when you need it most.

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Over longer timeframes, gold does tend to outperform during sustained bear markets or high inflation periods. But here's the catch: If you're holding gold waiting for the next crisis, you're underperforming during every bull market, which historically are longer and more profitable than bear markets.

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You're essentially accepting lower returns for decades in exchange for potentially better relative performance during a few crisis years. That's a terrible trade.

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The Diversification Delusion

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Some investors argue gold belongs in portfolios as diversification or a hedge against catastrophe.

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There's a kernel of truth here. A small allocation to gold, maybe 5-10% of a portfolio, can reduce volatility slightly and provide some insurance against extreme scenarios like hyperinflation or currency collapse.

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But let's be honest about what you're buying: insurance, not growth. And like all insurance, it costs you in opportunity cost. Every dollar in gold is a dollar not compounding in productive assets.

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The question isn't whether gold can serve as a hedge. It's whether that hedge is worth the cost of lower long term returns. For most people building wealth, the answer is no.

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If you're truly worried about catastrophic scenarios, you'd be better off with a fully funded emergency fund, diversified stock holdings across multiple countries, and some inflation protected bonds. Gold adds marginal benefit at significant cost.

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The Physical Asset Fantasy

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Gold bugs love claiming gold is "real money" or "outside the system." This sounds appealing until you think about it for five seconds.

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Try buying groceries with gold. Try paying your mortgage. Try explaining to your landlord that you'd like to pay rent in quarter ounce coins.

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Gold is only valuable because we collectively agree it's valuable, just like dollars. The difference is dollars are actually useful for transactions, while gold requires converting back to currency to be spent. That makes it less functional than the "fake" money gold enthusiasts love to criticize.

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And the "outside the system" argument? Unless you're literally burying gold bars in your backyard, you're holding it through the same financial system you're supposedly protecting against. Your gold ETF or vault storage is just as exposed to systemic risk as your brokerage account.

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When Gold Actually Makes Sense

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I'm not saying gold has zero place in anyone's portfolio. There are specific scenarios where limited gold exposure makes sense:

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If you're already wealthy and focused on wealth preservation rather than growth, a small gold position provides additional diversification. If you're legitimately concerned about hyperinflation or currency collapse, gold offers some protection.

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If you live in a country with unstable currency or government, physical gold can serve as portable wealth. If you're a sophisticated investor using gold tactically during specific market conditions, you might profit from short term moves.

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But notice what's missing from that list: building wealth. Growing your net worth. Funding retirement. Achieving financial independence.

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For those goals, gold is a distraction at best and a wealth destroyer at worst.

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Your Next Move

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Gold hitting all-time highs doesn't mean you need to care. In fact, it probably means you should care less, not more.

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High gold prices reflect fear and uncertainty in the market. That's when emotional investors make expensive mistakes, chasing safety in an asset that doesn't actually build wealth.

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Instead of buying gold, ask yourself: Are my investment fundamentals solid? Am I diversified across quality stocks and bonds? Do I have an emergency fund? Am I consistently investing for the long term?

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If the answer is yes, gold's price is irrelevant to your financial success. Let the fear traders chase shiny objects while you focus on owning businesses that generate actual wealth.

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Because here's the truth that changes everything: Wealth isn't built by hiding from uncertainty. It's built by owning productive assets through uncertainty and letting compound interest work for decades.

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Gold glitters. Productive assets compound. Choose accordingly.

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Master Money

I teach you how to master your money in less than 5 minutes per week. I am the host of The Personal Finance Podcast with 400K downloads monthly and the Founder of Master Money.

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