I’m an Investing Expert: Here’s Why Buying Gold and Silver Is the Best Way To Build Generational Wealth
Written by
Laura Beck
Edited by
Amen Oyiboke
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Smart inheritance planning means setting priorities to pass on wealth effectively. Before making estate plans, think about who will inherit and their needs and values. If you leave money and assets in the right ways based on your situation, you can be sure to take care of your loved ones. With the proper plan, you can make sure your legacy is secure for your heirs.
Precious metals like gold and silver have been valued as money and storehouses of wealth for thousands of years. Are they still an effective way to pass on wealth? We talked to two experts who argued yes–when allocated appropriately as part of a diversified estate plan.
Peter J. Klein, founder and chief investment officer at ALINE Wealth, and Frank Giustra, co-founder and strategic advisor to Aris Mining Corporation, told us that buying physical gold and silver is one of the best ways to build and preserve generational wealth.
Gold as a Portfolio Diversifier
Gold and silver also offer portfolio diversification and protection during stock market turmoil. When stocks and other risk assets sell-off, the prices of gold and silver often rise. For example, during the Great Recession of 2008-2009, the S&P 500 plunged over 50% while gold prices nearly doubled. Precious metals can help smooth out returns over a long enough period of time. And unlike paper assets, gold and silver cannot go to zero.
“Gold, unlike traditional stocks and bonds, behaves independently, providing a hedge against market fluctuations,” said Peter J. Klein.
Many investing experts recommend holding some gold as part of a diversified portfolio. Gold and silver have unique properties that make them an attractive asset for managing long-term wealth across generations.
This means that gold and silver should not be used for short-term speculation.
“You don’t buy gold to get rich,” said Frank Giustra. “It’s a long-term store of value. You should have at least 10% of your portfolio in gold. If you want higher returns from investing in gold, take more risk and buy gold mining stocks. The gold miners are the cheapest I have ever seen when compared to the gold price. There is great value out there.”
Giustra added, “Gold is one of the best-performing asset classes, if not the best, in the last 50 years. Between 1971 and 2022, gold had average annual returns of 7.78%, which was only slightly behind the return of commodities, with 8.3% average annual returns. Between 2000 and 2022, a gold investment would have yielded over 500% return versus the S&P at 300%.”
A Safe Haven in a Crisis
Geopolitical instability often causes market turmoil and heightens investor uncertainty. In these situations, gold and silver have historically served as a safe haven. Throughout history, precious metals have always retained their purchasing power, while stocks, bonds, and cash can lose value during periods of high inflation.
“Wars and geopolitical tensions historically drive investors towards gold, as its intrinsic value remains intact even during turbulent times,” said Klein.
Gold and silver’s intrinsic value holds up even when wars, conflicts, and crises are causing fear and uncertainty. Because it can preserve wealth through tumultuous times, allocating a portion of long-term investments to gold can help fulfill the goal of passing down lasting generational wealth.
“Gold is a good inflation hedge over the long run,” said Giustra. “But it truly outperforms when currencies start to fail. In North America, we are accustomed to a gold price in US dollar terms. But if you look at gold denominated in a country’s currency that is experiencing either high inflation or a failed monetary policy, the performance is quite spectacular. Other asset classes deemed necessary in inflationary periods have included Silver, most commodities, farmland, and fine art, although gold is the only monetary asset class. Some investors prefer Bitcoin, but it has never been tested in a crisis. Although it aspires to be a ‘digital gold,’ it is still too volatile and highly speculative.”
The Advantage for Generational Wealth
When it comes to passing down wealth to future generations, physical assets like gold and silver have unique advantages. They are easily transferable stores of value with no account paperwork required.
“Small allocations of gold can be easily inherited and retained across generations,” said Klein. “By incorporating gold into a comprehensive wealth management plan, families cannot only preserve their financial legacy but also empower future generations with the knowledge and resources to sustain it.”
Gold and silver are easy to physically inherit and retain in a family over generations. Physical precious metals can be discreetly held in a home safe, unlike real estate, for example, while assets held in accounts or trusts may be difficult to access as laws and access changes over the decades. This makes gold and silver ideal for passing down wealth from grandparents to parents to children and grandchildren.
More From GOBankingRates
