A hard financial winter is coming, says gold and silver investor with an unusual story to tell.
You could say Irene Buchanan perceives a bleak future in the next decade or so – stagflation, crippling debt, civil unrest and a depression which, if it doesn’t last as long as the infamous downturn of the ‘30s, will cut just as deep.
That’s why 45-year-old Buchanan (not her real name, changed to protect her identity) has bought, and is buying gold and silver from New Zealand Gold Merchants.
The story of how she came to buy gold and silver and how it changed her life is intriguing. After a messy divorce, she was left with a house (with a mortgage) and three kids – and not much more. Oh, and no job. She’d seen the pandemic coming but her job disappeared in the first lockdown and – even worse, she was battling an illness.
So she sat down with a friend of 20 years and discussed what to do. She’d predicted the pandemic after seeing the signs early: “I stocked our pantry with everything needed for the pandemic and I stocked up on toilet paper long before the rush on it began; we were ahead of the curve there,” she jokes.
But lockdown, no job and a grim future for her three children presented big challenges and she set a goal: to get herself and her children in a position where the kids didn’t have to worry about not being able to buy property in the future.
“The way I see things panning out in the next decade is that the amount of debt in the world, owed by governments, companies and people, is just unsustainable. The money that is being made now in the world is coming out of the future, my kids’ future.
“People’s kids are told to go to university on a student loan, get a degree, get a job, take out a loan for a car, take out a loan for a house – when will they ever be debt-free? It’s a system that can make them debt slaves forever.
“The way the property market has gone, it is impossible to see them ever being able to afford to buy a house – and I want my kids to own property.”
She wanted to guard against a future which she believes will carry little good with it: hyper-inflation, plunging sharemarkets and property markets, devalued assets. She says it is even possible governments will legislate to restrict people from pulling all their money out of banks.
So Buchanan and her friend launched into research, investigating ways to make money not dependent on burst-able bubbles. She decided not to go back into the workforce and instead became a full-time investor, spending long hours researching and understanding money, its origins, how it works and how it can best be employed for the circumstances she is combatting.
With no assets other than her house, she scraped together some capital from various sources, including a loan and a cashed-up insurance policy. She was joined by her friend, who had more substantial capital and her parents, who poured their life savings into a collaboration.
Over the last two years, she and they have built a portfolio which is about 40 per cent gold and silver, 40 per cent cryptocurrencies and up to 20 per cent shares. It has been successful – the starting sum has grown very much bigger – but Buchanan knows she has to keep on top of her investments because of perceived (and real) volatility.
“I lost 60 per cent of my cryptocurrency portfolio in two weeks,” she says, “but I knew not to panic and to stick with it. On paper, I’d lost $100,000 but I made all that back and more.”
While cryptocurrencies are the very definition of volatile, gold and silver are the balance to that: “Gold and silver have been money for 5000 years; that’s not going to change any time soon. I expect all my investments to make money but making huge capital gains is not gold and silver’s job, even though that can and does happen. Their main job is to protect your investments.”
In times of downturn, gold and silver are liquid and that means freedom, she says: “If you look at things now, you can see it [the downturn and loss of value of our money] is already happening. Even if you can get an interest rate of 1 per cent from a bank, the consumer price index is about 5 per cent – so you are immediately losing four per cent.”
While cryptocurrencies are high risk, with large fluctuations, gold and silver are the opposite – although Buchanan says any long-term analysis of gold shows that it generally outperforms the S&P 500 over the same period.
“It’s also a good time to buy gold as it’s a bit forgotten and out of the limelight at the moment. Prices on gold were selling at $3000 an ounce a while back but now it’s about $2500 – it’s a great opportunity to dive in. There is money to be made and, anyway, if you wait until the time when everyone wants to buy gold, it is hard to get.”
Buchanan says she buys from New Zealand Gold Merchants “because I like the way they run their business. They have no debt, they’ve been in business since the 1970s and they just get it…they are all over what’s happening in the world right now.
“They make it very easy to buy gold with very little wait time. I also buy silver – every month, even if it is just a little bit. That’s what I’d say to people: get started and keep adding to your stockpile until the point there is something more you want [than a protective investment] or there is something else you need [like protection from a downturn].”