“If you don’t read the newspaper you are uninformed. If you do read the newspaper you are misinformed.” – Mark Twain[i]
Has anyone ever taken the time to sit down and talk to you about anything important? How many people were lucky enough to have even one parent take the time to sit with them, teaching, showing and exploring concepts and ideas? And even better, how many have learned this by example from a parent? In the broader community that you grew up in I’d say the chances would be even less.
Has anyone ever sat down with you and talked about money, debt, taxes, budgeting, or anything related to business, finances, investments or speculations? Does anyone know the difference between an investment and a speculation, as it is prudent to think that stocks and real estate “always go up?”
Regarding gold and silver, has as anyone bought you precious metals over the years and taught you the value of saving? So who will teach the children about money? If it’s not a parent or guardian, will it come from the public school system, a friend, a University level course, the television or from an “expert” such as a financial planner?
Econ Circus wants to promote the 1% challenge, whereby you start by putting 1% of your net worth into precious metals such as gold or silver. The idea is that once you start the challenge, you will learn more about money along the way and once you get there you’ll most certainly want to put more than 1% into precious metals. In conjunction with that it is recommended to start buying precious metals for your children, your nieces and nephews or young people you know. As of writing a 1 oz. silver coin can be bought for just over $20, so it will hardly put a dent in your wallet, but the lessons learned and the accumulation thereof may be invaluable.
Let’s play the “there was a time when gold was $20 an oz.”[ii] thought experiment:
There was a period of time when your great-grandfather may have had $60 and thought that it was best to save this for posterity. He was thinking long terms so he decided to hold 3 items and store them in a safe. He first decided to buy an average men’s suit for $20, then he bought one 1 oz. gold coin and then decided to keep an US $20 bill. In 2020 the safe was opened and let’s see what we have.
- We have a men’s suit that has a replacement cost of around $1,000 to $2,000 USD.
- One 1 oz. gold coin that could be sold for close to $1,600 USD.
- And one $20 bill, which cannot even pay for two movie theatre tickets. (We’re not considering the ‘rareness’ of the now antique bill, which depending on the bill and its condition could be significantly higher.)
The purpose is that you can somewhat conceptualize purchasing power and the importance that it plays in deciding on the type of money that you choose to hold. Not one person can dispute that gold has retained its purchasing power whereas the US dollar has not, and like all fiat currencies the US dollar will eventually return to zero. If you understand this then it may help you to start thinking about owning precious metals a little more seriously. The good thing is that once you start thinking along these lines your mind will start thinking about even greater ideas.
What about other assets in general? Do you own any other hard assets and is your principal residence your asset? We can then start to think about land, including arable land for farming and other assets such as rare books, coins, stamps, alcohol, paintings, cars and guns. Some may be used to consume, some to trade for profit and some to be collected as a hobby, but they can all be saved and contribute to the wealth of your family.
No one is trying to sell you on anything; the purpose is that readers are encouraged to do something that does not come natural in this society: “plan.” Between public school indoctrination, the mainstream media, mainstream economics and other distractions such as games on your phone and paid streaming services, “planning” seems to have become a lost art. Most people have never read a book on economics, and if they have, it would likely be a pop-culture mainstream economic best seller; such a book is likely designed to be popular for the masses but offers little in terms of any useful economic understanding. I doubt that the average adult can recall when someone talked to them about money, wealth, future plans, posterity or how to leave a legacy, but just because no one did that for them does not mean that they cannot do that for someone else.
No one can work out a blueprint or an asset mix for yourself or your family, so it behoves you to do that for yourself. I can offer ideas and suggestions, but the purpose is that readers are encouraged to think about concepts that they have not thought of before. Often you may have to pay for such ideas and even then they will probably be subpar, so I hope readers can appreciate these ideas for free. Please follow @EconCircus on Twitter, Facebook and the YouTube channel. In the end, the main idea is that someone will talk to your children about money, and if it’s not going to be you, then who will it be?
[i] Attributed to Mark Twain