WHY DAVE RAMSEY IS WRONG ABOUT PRECIOUS METALS
In a recent article, Dave Ramsey laid out a case for Why Investing in Precious Metals Is a Bad Idea. While the discussion may have convinced some people, such as those with limited knowledge of the subject, experienced precious metals investors and advisors recognize the flaws in Ramsey’s presentation. Here are the real facts and why an investment in precious metals is worth your consideration.
Where Dave Ramsey Went Wrong Regarding Precious Metals
Dave Ramsey has built an amazing career for himself as a leading personality on radio, podcasts, and books, reaching millions of Americans. His radio show is heard by over a million listeners each week in the United States alone. His specialty is personal finance, and much of his work revolves around helping people get out of debt.
However, Ramsey is not a specialist in precious metals. So, when he offers advice on this subject, it comes not from special expertise but from general impressions and assumptions. When you look at his argument carefully, you can see that it consists mainly of claiming that the consensus among precious metals experts say, is wrong.
Gold Is Worth What You Think It Is – If You Do Your Homework
Ramsey comes out of the gate with a simple declaration that “Gold isn’t worth what you think it is.”
This is an odd statement. After all, how does he know what the reader thinks gold is worth? If you are concerned that you don’t know what gold is worth, you can find out by looking at the spot price. Studying the spot price and historical charts gives you a good idea of the current and expected prices of precious metals.
Beyond that, you can talk to a precious metals expert like those at Atlanta Gold & Coin Buyers to get further insight. Dig deep enough and you will realize that gold has been valuable since ancient times, with no end in sight. Why else would people invest in precious metals for hundreds, even thousands of years?
The End of Dollar-to-Gold Conversion Did Not Destroy Gold’s Value
Perhaps to give historical proof, Ramsey goes on to discuss how Nixon ended the government’s practice of exchanging gold for dollars. Coincidentally, 2021 marks the 50th anniversary of the closing of the gold window. He suggests that because you can’t take your dollars to the government and get gold in return, that gold will not help you in times of inflation.
What Ramsey failed to mention are the reasons why Nixon did this. The president and others in the government were concerned there would be a run on gold. This was due to massive debts from the war and high inflation rates caused by the Federal Reserve’s loose monetary policies. Essentially, foreign central banks began to realize that the dollar wasn’t as good as gold.
There wasn’t enough gold to cover all the paper currency if foreign central banks requested to exchange their dollars for gold. Meanwhile, the European currency was dipping, and their banks started converting dollars to gold to protect their interests. In other words, they viewed gold as significantly more valuable than paper money.
Furthermore, if the dollar tanks, why would non-convertibility through the government mean that having gold would be a bad idea? Since gold and the dollar are no longer linked, devaluation of the dollar would have no impact on the country’s gold reserves. In fact, a drop in the strength of the dollar is likely to increase the demand for gold. According to Jean Folger’s article, What Drives the Price of Gold, gold tends to go up when the dollar goes down.
You can read a more complete explanation of this historical time in Sandra Kollen Ghizoni’s 1971 article, Nixon Ends Convertibility of U.S. Dollars to Gold and Announces Wage/Price Controls.