Gold has been a symbol of wealth, privilege, opulence and power for millennia. It has always been “the metal of kings” and it has been used to show off affluence and project dominance since time immemorial. However, gold owners have also been perceived as greedy, secretive, or suspicious for not investing their savings like “normal” investors. They instead choose to “hoard gold bars and coins” like Scrooge McDuck instead of opening a savings account or buying some bonds like everyone else.  

“Gold’s Ongoing Search for a PR Guru” was taken from BFI Bullion’s recent quarterly newsletter, the Digger, published on November 4, 2024. To read this latest quarterly Digger in its entirety, click here.

Gold still carries a lot of this reputational heritage, or this “PR baggage”, to this day.  As a result, even though gold remains a cornerstone of global finance and has offered phenomenal returns (as well as security and stability) to countless investors, the broader public is still missing out.

Elementary myth-busting

Unfortunately, a lot of the prevalent misconceptions about gold lack any kind of basis in fact or rational foundation; instead, they are emotionally charged and that makes them tricky to uproot from the minds of the public using mere reason. For example, the idea that investing one’s savings in physical gold is somehow evidence of greed or an indication that the investor has “something to hide” might be totally baseless, but it has stuck, reenforced by the cliché of the Hollywood villain that the mainstream entertainment industry and the media have propagated for so long. Who could ever forget the James Bond book/movie, Goldfinger?

The rational counterargument is much less childish, of course. Saving in gold instead of a savings account, which is far from being suspicious, is simply smarter and a whole lot safer. Valuing your privacy and ensuring that you always have unrestricted access to your hard-earned wealth are fundamental financial liberties. Protecting yourself against state overreach or banking crises resulting in capital controls and “haircuts” are simply common-sense steps to take given the track record of both governments and banks in the last decades.  

Another common myth is the idea that precious metals are only reserved for the ultra-rich and that such investments are not accessible to the “average Joe”. A lot of people truly believe that they could never afford to own physical gold or that, even if they could, the path to access it would be overly complicated and prohibitively expensive. Again, nothing could be further from the truth.

Like any other offered good and/or service in the market, there are different options for different budgets. Granted, not everyone can afford their very own gold bunker. However almost anyone who can afford paying an investment manager “2 and 20” (aka 2% management fee and 20% performance fee) and assume the associated risks to boot, can probably afford the usually much lower storage fee for physical metals.

Of course, different providers offer different terms, as do we at BFI Bullion. There are different storage options to suite the investor, and the minimums for an initial purchase – as well as subsequent purchases - are very attainable for the non-Scrooge McDuck’s.

When it comes to the overall “accessibility” of a precious metal investment, this is a concern that is totally unfounded. It is arguably much more challenging for the average Joe to invest in stocks directly (i.e. trading account opening, stock screening, selecting, evaluating, buying and selling) than to buy physical gold.

Advanced myth-busting

Moving on to more sophisticated misbeliefs about gold, we can find some narratives that sound much less naive. The historical reputational problems of the gold mining industry are one example. The key word here might be “historical”, however, as the unfortunate fact remains that gold miners have a checkered past, to put it charitably. There have been numerous incidents and documented abuses over time, both environmental and humanitarian. Some of these issues still persist to this day. As Earthworks puts it, “gold mining is one of the most destructive industries in the world. It can displace communities, contaminate drinking water, hurt workers, and destroy pristine environments. It pollutes water and land with mercury and cyanide, endangering the health of people and ecosystems.” While there are certainly cases of this being true and ongoing, and it is horrifying, this blanket statement also grossly misleading.

This is because the vast majority of recent incidents of this sort concern the illegal, “dark side” of the mining sector, very similar to what you see in other sectors like energy, agriculture, or other industries. For many years already, the biggest players - both miners and refiners - have been taking meaningful steps to reduce their environmental impact and they have worked hard to achieve sustainability goals, with provable results. These results were outlined in great detail during our Fireside Conversation between Frank R. Suess and Christoph Wild, president of the ASFCMP and during our interview with the CEO of the World Gold Council, David Tait. And it holds especially true for Swiss refiners, as they adhere to higher standards and stricter processes than their peers around in the world. In Switzerland, the global physical gold market is pretty much a “closed circuit”. One cannot simply buy a kilo of gold from an illegal mine in Ghana and bring it for storage in our vaults at BFI Bullion, nor is it possible for us to “accidentally” sell our clients “dirty gold” from some makeshift, cartel-linked mine in Colombia. Documentation and tracing processes are there for a reason.

In fact, our own group’s subsidiary, “aXedras”, is all about using distributed ledger technology to provide a reliable, transparent way of immutably documenting the provenance and chain of custody of precious metals, allowing all market players to prove and verify responsible and ethical sourcing. In other words, this idea that a gold bar is potentially as destructive and as inhumane as a “blood diamond” is simply untrue and the notion that “you don’t know where your gold comes from” is only accurate if you actively try to buy unmarked and untraceable bars from the darkest corners of the market. In all other cases, you, and everyone else, will know exactly where your gold came from.

Last but certainly not least, there is also a political angle to gold’s “PR problem”. Over the past decades, gold has been increasingly associated with the political Right. This wasn’t really an issue (in fact, it makes a lot of sense that conservative voters would also make conservative investors who would naturally gravitate toward the safe haven) until some recent attempts were made by media to link the metal to more fringe political groups. For example, a 2019 piece in the New Statesman titled “Why is the far right obsessed with gold?” pointed to the fact that far-right politicians across Europe were stockpiling gold as evidence supporting their view that anyone else who opposes fiat money must also be an extremist too.

Now it is plain as day that this line of attack on gold and gold owners is nothing more than a “character assassination” attempt. It serves the interests of those calling for more state intervention and less individual and financial liberty, and it is a transparent ploy to justify egregious government trespassing into the private lives of average citizens who happen to disagree with this worldview. However, in the age of “thought leaders”, think tanks, and social media influencers, even transparent attacks like this have been known to be affective. They can dissuade people from making certain choices even if (or perhaps especially if) they are in their own best interests.

The bigger picture

All of the aforementioned misconceptions about gold are likely to persist and won’t go away anytime soon. Gold, much like Switzerland itself, also tends to be a target of the media; you don’t hear about gold unless it is a) part of a massive robbery, b) part of the arrest of a drug lord, or c) a large shipment of fraudulent gold is caught trying to cross a border.

As long as the metal retains its safe haven status and as long as it continues to offer a much more reliable and sound alternative to cash - cash that is losing its purchasing power by the day - or to overpriced and artificially propped up stocks, gold is doomed to remain despised by the powers that be. And thus, gold will continue its ongoing struggles and search for a public relations guru.

But the good news is that there is a bigger picture here. These baseless attacks have no real impact on gold owners, on those of us who hold precious metals for the right reasons, and for those of us who understand gold’s real value. These attacks do affect everyone else, though, by indirectly depriving them of the opportunity to participate in these same gains, to protect their wealth, and to provide for their next generation.

>> Read the entire Digger here.

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