DRIGGS, IDAHO – Greetings from our cabin on the Idaho-Wyoming border. It’s time for another Friday mailbag edition, where I answer the latest questions you’ve sent in…
Gold is on readers’ minds this week. Can the government confiscate it? Are gold-backed cryptocurrencies a good investment? And more…
We also discuss “Income for Life” – which, as longtime readers know, is a whole-life insurance policy that can pay 55 times more interest than banks. (It’s one of the world’s most generous retirement secrets.)
And finally, we talk travel… the electric-vehicle revolution… and one reader even takes issue with the time my family has spent in Idaho.
But before we dive in, as always, thank you for your supportive and encouraging messages, which keep us going… for all your questions, which keep me thinking… and for all your book, TV, and wellness recommendations, which keep us learning.
(I investigate all the recommendations you send us, and end up incorporating quite a few of them into our lives.) Thank you!
Now, let’s get to this week’s questions and comments…
Reader question: I read something that our new government is going to make it illegal to own gold soon. Ever hear that? I also own a couple guns and I read they want to make gun ownership illegal as well. What to do? Bury all this stuff? I have 6 acres of woods to mess with but really, what crazy times we live in now!
It is a very common fear that the government will confiscate gold again. I get asked this question all the time. I’m not worried about it though.
The reason they banned gold in the 1930s was because they wanted to devalue the dollar, and they had to first lock the exits for capital.
Up until 1933, gold was money in circulation, so it would have been easy for capital to flee the dollar system. Today, gold is a pariah. It was exiled from the monetary system 50 years ago.
I’ve written before that one way the U.S. could solve its debt problems would be to bring gold back into the system, albeit at a much higher price. (The U.S. has the world’s largest gold stockpile. They could use their gold to backstop their debts.)
Even if the feds don’t choose this path, they have no reason to outlaw gold anymore. By exiling it 50 years ago, they relegated it to “just another commodity”…
As for guns, that’s a different matter…
Reader question: Tom, I enjoy reading your postcards. I have something for you to ponder. What if the information about how much gold exists above ground is wrong? What if there were 10 times more, or 50 times more? How would your perspective change? And how would that affect the global economy?
Are you asking what would happen if 10,000 tons of refined gold were suddenly discovered that no one had previously known about? Well, then the price of gold would probably fall, all else being equal.
But look, it’s not the total gold in existence that matters. It’s the interaction between buyers and sellers that matters.
The transactions between buyers and sellers set the price of gold. Who’s willing to offer it up? And who’s willing to bid for it? It’s really all that matters. (As they say in economics, “prices are set at the margins.”)
Reader question: I have been reading your postcards for a while now and have been accumulating gold and silver when I can. My question is, when you go to cash in your gold and silver, what are the tax consequences of the transaction? Are precious metals taxed at the capital gains rate, like stocks? Enjoy your skiing.
I’m no tax expert, but long-term capital gains on gold and silver have their own special tax rate… 28%. It’s a crime.
Reader question: We have a BlockFi crypto interest account. BlockFi offers PAXG with interest. What do you think of PAXG as a way to hold physical gold?
PAXG (or PAX Gold) is a cryptocurrency that’s backed by physical gold, audited, and held in a vault. Each PAXG coin is backed by exactly 1 ounce of gold bullion.
I love this concept but I’m not familiar enough with the details of this specific project to say anything insightful about it. (I’ve never used PAXG personally.)
I wonder how liquid these coins are. Could I sell them in a foreign country at par, for example? If so, that would be pretty cool, because now I’d have a way to transport wealth denominated in gold anywhere in the world on a data stick.
Reader comment: Can you imagine if Congress, instead of wasting trillions of dollars on Democrat wish lists, would give every American citizen $1 million? $1.9 trillion divided by 335 million citizens equals $1 million each. This economy would take off, the Dow would go to 50,000, and your Dow-to-Gold ratio would be toast. Just doing the math.
I can’t tell if you’re joking or if you need a new calculator.
Reader comment: I don’t understand why you don’t write more about your whole-life policies. Money is like a river… It has to flow, and a good life insurance company does that.
I have been studying banking for the last 10 years since they tried to bankrupt me over some real estate deals I did. There has never been such a bigger scam in the world as the bankers have pulled off in the last 13 years.
Good question. Our Income for Life insurance policies don’t lend themselves to exciting journalism or storytelling. But that’s sort of the point…
They just grind away, year after year, compounding our savings tax-free… and offering us liquidity whenever we need it.
They’re one of the world’s most powerful wealth-building accounts. They can pay 55 times more interest than banks. Yet most people still don’t know about them.
That’s why I spent years of research developing a video course about this. It explains everything you need to know about these Income for Life accounts… and how to get started quickly and easily – right from your home computer.
If you’re a Tom’s Portfolio subscriber, you can access your Income for Life course right here. If you’re not a paid-up subscriber yet, watch this to learn more.
Reader question: Why don’t you invest in copper or lithium, with electric car production set to boom in the coming years? Volkswagen alone are working on around 70 electric models.
Maybe there’s money to be made there, but “pop” investing isn’t my style. I like cheap, contrarian investments.
Reader question: Why can’t you have the best of both worlds? Take off for Mexico when the skiing season ends, then return late fall for next skiing season, and maybe stay at the same place if available…
We’re considering this idea.
Reader question: I am intrigued about Margarita Island and the little boutique hotel your real estate friend told you about. As I am about to retire and see a bleak future for being able to afford a decent life in the United States, I am looking at all options overseas.
My spouse has often mentioned living near the beach and having a small B&B or hotel to supplement retirement income. I would be interested in hearing from your real estate friend and finding out more about Margarita Island and potential investment avenues.
The problem is security. As I wrote on February 24, Venezuela is incredibly dangerous. You’re risking your life just to go there.
Look up the recent stories of crime against tourists on Isla Margarita on Google. You’ll be horrified.
Reader comment: After watching lawmakers in Idaho increase penalties for pot, something that is everyone’s right to use, given that you own your body (one would think), I would find living in such a place a simply HORRIBLE idea!
You’re being a bit unfair to Idaho.
It may have a tough stance on cannabis, but surely, in the grand scheme of infringing on personal liberties, it’s no better or worse than the federal government or any other state in the Union?
And that’s all we have time for today. As always, thanks to everyone who wrote in!
Keep sending your questions and comments to [email protected], and I’ll do my best to answer them in future Friday mailbag editions.
– Tom Dyson
Like what you’re reading? Send your thoughts to [email protected].