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MY FATHER WAS president of J.S. Collins and Son, a local hardware and lumber chain in southern New Jersey. Occasionally, he’d take me to the flagship location in Moorestown after hours. While he was back in his office doing important business, I wandered around the empty store and general office areas. At 10 years old, it was easy to get bored.
One day, I got the idea to pull out an empty drawer from one of the office desks. I turned it over and with a marking pencil I wrote: “July 1932. I am old and about to die. I buried the gold in the Collins parking lot. It’s near the front.” I replaced the drawer before my dad got back, smiling at how clever I was. The secret message would never be read until some future date when someone pulled the drawer out and turned it over. And importantly, I had finished without Dad catching me in the act.
A few years went by. I had long forgotten about my prank. Collins was going out of business and much of the old furniture was being sold. Dad came home one afternoon and I overheard him telling Mom that, “A guy who bought one of the old desks from Collins found something about gold being buried in the parking lot scribbled in one of the drawers. He got all excited and said, ‘Where are they talking about? Let’s go dig.’” I remembered what I had done and was filled with a deep sense of teenage satisfaction. My dad got a good laugh out of it when I told him the rest of the story.
What is it about gold? I’ve known people who, distrustful of the stock market, financial institutions and the “system” in general, keep a large portion of their wealth in gold. Certainly, there’s a multitude of voices out there seeking to convince people that the ultimate economic collapse is almost upon us and that the only safe havens are gold and perhaps silver. Everyone has seen the infomercials.
I confess I’m not immune to the attraction. I am uneasy about the unfathomable national debt that’s been amassed, not just in the U.S., but in countries all over the world. Sometimes, I wonder what would happen if a massive electromagnetic pulse were to erase all the stored electronic bits of information that represent a huge portion of our collective wealth. At such a time, it might be beneficial to have a cache of gold handy.
I have not purchased gold in more than 12 years. I did buy some American Eagle gold bullion coins and some old U.S. gold coins over a period of five years ending in 2011. On average, I paid about $1,250 an ounce for my small clutch of coins. Gold has lately traded at around $1,950. My back of the envelope calculation indicates my purchases have appreciated at around 4% a year. That’s not awful. It’s a better return than I would have received by investing in savings bonds over the same period. But it hardly qualifies as a great investment.
In his bestselling book The Only Investment Guide You’ll Ever Need, Andrew Tobias had this to say about gold: “Gold itself pays no interest and costs money to insure. It is a hedge against inflation, all right, and a handy way to buy passage to Liechtenstein, or wherever it is we’re all supposed to flee to when the much-ballyhooed collapse finally materializes. But if you’re looking for an inflation hedge, you might do better with stocks or real estate. In the long run, they will rise with inflation, too. And in the short run, they pay dividends and rent.”
I don’t plan on selling my gold coins. If I were to do so, there would be additional losses due to the buy-sell spread that a coin dealer imposes. No, I plan to let them sit in my bank safe-deposit box for my children to deal with after my wife and I are gone. Maybe they’ll need them for the much-ballyhooed collapse. I sure hope I don’t.
Ken Cutler lives in Lancaster, Pennsylvania, and has worked as an electrical engineer in the nuclear power industry for more than 38 years. There, he has become an informal financial advisor for many of his coworkers. Ken is involved in his church, enjoys traveling and hiking with his wife Lisa, is a shortwave radio hobbyist, and has a soft spot for cats and dogs. Check out Ken’s earlier articles.
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it’s not all-or-nothing. Buy as much or as little as you want, keep it physically nearby, be ready to buy your way out of trouble if the need arises. If that need never does come, pass it on to your kids for the same purpose. 1/10%, 1%, 10% of your wealth—it is up to you. The diversification helps me sleep better, and that is worth something!
To me, gold is just another metal. It’s a great conductor of electricity but has few other practical uses. If the economic system did collapse and we were back to the barter system and I had a bushel of wheat or a barrel of oil, would I trade it for your gold? Nope. I would favor selling off the contents of the gold depositories at Ft. Knox and West Point, which, other than for auditing purposes, haven’t been touched since the Nixon administration.
Good story.
The gold that has been on my left hand for forty four years is the only gold I have and I have not been tempted yet to buy any gold coins.
I have a good childhood memory of my grandfather giving me a silver dollar back in the fifties but I foolishly sold it and spent the sales proceeds in my youth. If I had some gold coins I expect I would give them to my grand children on an important milestone date in their life with no strings attached. I got a few two dollar bills that will be gifted, hopefully during my life. I am just waiting for the right occasion.
Bravo Ken, what a great sense of humor at age 10!
Thanks Dan. If only I could figure out the financial angle, I’d love to share more of my childhood shenanigans.
Enjoyed the story, Ken. Hope the parking lot survived intact.
Like you, I also keep some gold. Mine came to me through my family, around 1990. On that time frame, gold’s returns have been much better — approximately 14.4% per year, more than outpacing inflation. Also like you, I’ll likely never spend my cache and someone else will be left to deal with it.
On another level, I feel hypocritical for having any gold. Worldwide, gold mining has been hugely destructive to the environment.
Thanks Jo. I think the parking lot remained unscathed, except for that unexplained hole near the front. 1990 would have been a good time to buy gold. I was a bit late to the game. My first gold coin was a quarter ounce American Eagle that I bought in 1999 for $87.50. Wish I had bought more back then, but market timing has never been my strong suit.