A new Gallup poll finds Americans are increasingly looking to gold as a superior investment.
A Forbes article on the survey reports that 26% view gold as the best investment over the long term. That’s almost double the number from a year ago.
It’s also the first time in a decade that more people prefer gold to stocks.
Other Gallup Findings
Other recent Gallup findings fill in the picture. Almost half of those surveyed (48%) said they’re concerned about the safety of their money in the banks; 29% describe themselves as “moderately worried,” while 19% are “very worried.”
But at least the monetary authorities are providing some hope, right?
Well, not really.
Asked by Gallup how much confidence they have in economic leaders “to do or to recommend the right thing for the economy,” those polled find Federal Reserve chairman Jerome Powell and Treasury Secretary Janet Yellen equally uninspiring of confidence. A majority have only a little or almost no confidence in either.
Confidence in Powell has fallen for three years in a row. He now has the lowest rating (36%) of any Fed chairman in the history of Gallup surveys. The next closest was Yellen at only 37% confidence when she held the Fed post.
These poll results force a confrontation with reality. Unlike gold, the value of which is intrinsic, the U.S. dollar, like all other unbacked, irredeemable, fiat paper and digital currencies, is a confidence game.
Gold vs. the Dollar
So great was the confidence in and awe of America’s financial might after World War II that the dollar became the global currency of choice. But there was more to that confidence than American economic power. The rest of the world was assured that if they wished to redeem their dollars, the U.S. Treasury would happily pay them in gold at any time. The dollar was promised to be “good as gold!”
That promise didn’t last long. It has been more than 50 years since the dollar last had even a tenuous backing by gold. This chart shows the deterioration of the dollar’s purchasing power since the dollar lost its gold backing in 1971.
People accept dollars as payment for their goods and services only in the confidence that the next person will accept them as well. But inflation—the artificial expansion of money and credit by the authorities—undermines confidence that the next person will accept them at the same value.
It’s “madness to just keep printing money,” Warren Buffett said recently. “We should be very careful. It’s very hard to see how you recover once you let the genie out of the bottle and people lose faith in the currency.”
De-dollarization and Weaponizing the Dollar
When oil producers, like the Saudis, begin to experiment with pricing their resources in non-dollar currencies and are joined by countries like Argentina making noises about paying for oil in yuan, they are only jumping on a de-dollarization bandwagon that has already left the station. Other countries, from Mexico to Thailand and India, have joined China and Russia in adding to their gold reserves, a vote of no confidence in the dollar.
But the opinion surveys show that confidence in the banking system is cracking as well. Our fractional reserve banking system relies on confidence no less than the dollar. Since banks are only required to maintain reserves that are a fraction of their deposits, a rush of bank withdrawals can quickly spell trouble, as recent bank failures have revealed.
One spillover effect of the bank crisis is the news that depositors in Silicon Valley Bank’s Cayman Island branch will not receive the protection that American depositors received when the FDIC took over in March. Those depositors include, according to reports, multiple Chinese investment firms. They will now become merely unsecured creditors of the bank.
Between bank failures and Washington’s weaponization of the dollar as a tool of its foreign policy interventions, not to mention inflation and debt ceiling questions, the dollar’s allure to would-be foreign depositors and creditors is not growing.
Failing confidence leads us to ask, as we did in our 2023 Global Gold Report, “what is the special quality of gold that surpasses every other form of money?” It’s this: dangerous counterparty risk lurks in the shadows of all investment vehicles, except for gold and silver.
What is counterparty risk? It’s your confidence in or dependence on someone else’s performance. Your dependence on their wisdom, skill, or honesty. It’s your dependence on managers, officials, politicians, institutions, and governments. It’s your dependence on debtors everywhere to meet their obligations.
The value and wealth preservation advantages of gold and silver do not depend on promises to perform. Their value is not dependent on officials, managers, institutions, or states. Gold is not at risk of nonpayment, default, or bankruptcy.
The value of gold and silver is intrinsic. Confidence in gold and silver has been ratified by the experience of mankind across the centuries and around the world.
If you’re interested in investing in precious metals, let us provide you with a free one-on-one consultation.
Red Rock Disclaimer
The opinions, beliefs, and viewpoints expressed in this article do not necessarily reflect the opinions, beliefs, and viewpoints of Red Rock Secured LLC or the official policies of Red Rock Secured LLC. Red Rock Secured LLC is not a financial advisor, is not licensed to provide investment or tax advice, and neither provides investment nor financial advice. Red Rock is a product specialist that can help evaluate your precious metals purchase options.