Why Are Gold and Silver Prices Going Up?

Today we'll be discussing gold and silver and whether or not you should invest in it. Hello and welcome to Money Talks. My name is Ken Wink from Summit Financial Consulting right here in Macomb County, Michigan. If you'd like more info about what you hear during our show today, give me a call at 586-226-2100 or visit us online at summitfc.net. While you're at the website, please check out that podcast page. You can look at our past shows and you can also subscribe on Apple Podcasts, Spotify, or Amazon Music.

So let me start by saying that today's show is not investment advice.

And I'd love to talk with you one-on-one to determine what might or might not be a good fit for you. But gold and silver, it has been in the headlines. It seems like every single day we get calls from clients saying, again, almost every single day, just asking, should we buy gold and silver? And gold is up almost 90% in the last year. Silver is up 270% in the last year. So the question everyone's asking is, is it too risky? Is this a good idea? What should we do? So we're just going to talk about gold and silver today and how it might be a fit. But before we jump into this topic, let me introduce my co-host, Tony. Um, Tony, great news. My wife saw the latest podcast on YouTube. She said I'm looking a bit better. She's digging the new, uh, the new headphones. You know, I was, I was taking a lot of criticism from my wife and daughter Charlotte for my headphones and how my cheeks look like I was a squirrel with cheeks full of nuts, you know, for the spring. But there's nothing wrong with having your wife say you don't look as terrible as you did before.

You know, am I wrong? I guess. I don't know. I don't know. Sounds like a tough crowd. You got to please that tough crowd, your wife and kids. That's always hard. Fortunately, my wife doesn't watch the show. Uh, no offense, but it's probably better. I'd hear, believe me, I'd hear about it. Um, uh, but no, I, I, you, you look great. You always look great. I think you look fine with headphones. Um, I did not agree with that assessment, uh, but you do look great. It's always better to have the in-ear. I wear these because I'm on all day and I need to shut out the noise around me. Um, yeah, that makes sense. Yeah, it's just so I can really hear what's going on in the audio. You know, as the as the producer and co-host, I need to really pay attention to the audio or at least I'm supposed to be. But, hey, you said you're in Macomb County, right? I mean, that's where the offices are. That's where you're located. There's a you know, there's a Macomb, Illinois, a city named Macomb. It's where Western Illinois University is at.

Is it M-A-C-O-M-B? Yeah. Oh, that's where I live is Macomb. So, yeah, I live in the city Macomb.

Oh, you have a city? Michigan has one and Illinois has one? Oh, man. Yeah, Macomb. There used to be a huge Christian rock festival there every year, a week-long festival called Cornerstone, and it was huge. I mean... We're talking about 80,000 people between anywhere between, depending on the year, 30 and 80,000 people. That's wild. Yeah. Huge. Like days long. A record company I worked for sponsored the acoustic stage there. And I ran this little acoustic label called Silent Planet Records for a while. And we had a stage every year there. But we go to Macomb. It's near Peoria. It's not far from Peoria. Oh, okay. But there is a university in Macomb. It's a tiny, tiny town, but there's a university there. So kind of. Yeah. Yeah. If without the university, it wouldn't be a lot. But with the university, it's it's it's a nice little town. At any rate, I found that interesting. You said Macomb County and you live in Macomb, the town. Yeah. You didn't even know that, that there was a Macomb, Illinois town. Not. Yeah, I wonder if our, I wonder if anybody else listening in the area, uh, was familiar with that. Um, also I wanted to point out, uh, I keep thinking your last name is Wink. Uh, my last name is Sure. We have kind of cool last names, right? Um, but I'm thinking, I was thinking your, your last name is Wink, this is your show. Um, if we added a third person, we could go by Wink and Blink and a Nod. Obviously you would be winking. I could be, I don't know if I'd be blinking. And then I thought maybe we'd add your brother as nod. Yeah. Maybe Jim could come on. I mean, we could really compound things.

Wink, wink. My dad's wink, you know, just wink, wink, wink. When we were actually trying to come up with the name for our business, you know, we're sitting in a room and we're just, let's come up with a hundred names. And every name we came up with was already taken. except for three. One was Summit Financial Consulting, LLC. One was Triad Financial. And then the last was Wink Wink Financial.

That sounds super, or wink and wink financial, but it just sounded so shady, like wink, wink, like so. Yeah, wink. Yeah, yeah. Well, and there's a lot you can do with that name. Did you get teased a lot as a child with your name being wink? Not too much, no. I mean, people would wink at me, but I never... Never took offense. That's good. That's good. I've never done that and won't. But yes. Well, hey, gold and silver. I want to know, Ken, I don't I don't know. So I'm going to learn something today. I've been hearing about how, you know, I've heard this. I've been following it, you know, gold and silver. Why has gold and silver gone up so much? Is it world events? Does that play a part with unrest in the world, the Middle East or tariffs? Does that have something to do with it?

There's a bunch of reasons, and I'm going to go over a chunk of them today quickly. But I think one of the sort of the basis of everything that you just mentioned is that gold and silver for thousands of years have been considered real solid money.

You know, you can't print literally and figuratively.

Right.

Yeah.

It's solid money. Yeah. Yes. Yeah. I mean, it doesn't rot. It doesn't rust. It's universally recognized. Politicians cannot create gold and silver out of thin air. The Federal Reserve can't create gold.

You can't print gold. You can't print silver. No. No.

Yeah. So, you know, other currencies like the euro or the U.S. dollar, they are backed by confidence. Right. So like before 1971, the U.S. dollar was actually backed by gold. It was called the gold standard. Yeah. Yeah. President Nixon took us off the gold standard. So it was it was backed by confidence. Yeah.

And air quotes confidence for those listening and not viewing. Yeah.

So I think that's that's one reason is that that's that's what we've got a shortage of lately. Tony is confidence. These are not pretty much every country in the world operates at a deficit. Right. So it's not great. So, no, no.

No, I mean, if every household in America ran at a deficit and a lot of them do, but then that's how we get into trouble economically and financially. And since the government runs at a huge deficit, right? I mean, 37, 38, 39 trillion, whatever it is that now it's goes up exponentially every day. And that's a T I don't under, you know, you can't even wrap your head around what $1 trillion is, let alone 37 or 39 trillion.

Yeah. Yeah. And I mean, so that's definitely one of the reasons that gold and silver are going up is just government that's completely out of control. And if you're a government, you've got a choice. How am I going to pay this? You know, how am I going to handle this debt? So one is you can pay it back. Two is you default and basically say, sorry, I'm not paying you back. Or three is inflate it away. So one, paying it back, that's politically painful. You know, now you need to cut back programs. You need to reduce spending. People are going to lose jobs most likely. Two, defaulting, that's typically catastrophic. And, you know, that's where you get a hyperinflation and deflation. Your dollar's worth less than a penny. You know, that's happened a couple times in history. So the last choice is what most governments choose is inflate it away. So when you have inflation, that makes old debt cheaper because it's paid back with less valuable dollars. You know, the less the dollar's worth, the easier it is to pay back debt. So yeah, precious metals to some people are seeming a little bit more dependable or maybe more credible than a government when the spending's out of control. You brought up a good point about the national debt. The interest on our national debt this year for the first time will be over a trillion dollars. And that's real money even to you, Ken. That's real money.

That is right.

That is right. If any of our listeners or Tony, if you'd like to just really be taken aback, if you go to usdebtclock.org, you can see for yourself all the numbers for how much debt our government's taking on.

Fascinating. And you can get lost in there. There's so many different aspects of the numbers and they just how fast they go are going up. It's an actual debt clock and it shows it going up and it's unbelievable. Yeah, I try to avoid it. I used to go there a lot and look at all the numbers and now it's just depressing. It is. USDetClock.org. Yeah.

Well, there's been a lot of talk about tariffs and how they might improve the situation. So the debt clock, as it figured out, the total revenue gathered in tariffs per taxpayer is $3,247. So theoretically speaking, the government could you know, cut a check or do some kind of a rebate to people because of tariffs. But the staggering thing is that the tariff revenue per person for taxpayer is $3,247. The national debt for taxpayer is $355,810.

If you divide what we owe, the national debt, by the number of taxpayers, each individual, if we wanted to pay it off, would have to pay that in taxes just to pay off the debt.

Yeah.

Three hundred and fifty five thousand versus you're going to write your when you write your check, I'll write mine to the government. And the problem is, even if we paid that to the government, it would never get spent to pay down the debt. It would go into the general fund and just poof.

It's gone.

Yeah.

Yeah, so another reason is just inflation. So it's not just high grocery bills that we're all dealing with. When the U.S. dollar goes down, the prices of things typically goes up. So your purchasing power and your investments, they lose a little bit of valuableness, I guess, when the dollar drops. So I looked at the chart. The U.S. dollar over the past year has now dropped over 10%. And for a year, that's one of the biggest drops in over 50 years. Wow. So dollars worth less. So just by nature of currency exchanges, one dollar will buy less gold. So the price of gold goes up when priced in U.S. dollars because the U.S. dollar is just worth less.

Yeah. Yeah. I saw I actually saw them talking about this a couple of times recently on CNBC. In fact, yesterday they were talking about the value of the dollar and basically said what you're saying. And that is the value of the U.S. dollars dropped, especially in the past year. And it's the biggest drop in 50 years, as you mentioned. That's tough. I mean, I guess that is one good reason. And that that does tie into gold prices going up. Another thing that raises prices are more people buying it, right? I mean, if the demand goes up, the price goes up. Is that right?

Absolutely right. And what some people believe is going on behind the scenes is, you know, there's a lot going on internationally right now. Sure. Yeah, that's what I was thinking might be a big cause. Yeah. So central governments, central banks are potentially buying gold. So let's just say that they own U.S. dollars or they own U.S. government bonds. They might be trying to send the U.S. government a message, sell those bonds, sell those U.S. dollars and buying gold because it's just the price of these precious metals has gone up so fast. It almost makes you think, is it just your individual investors that are pushing it up with all this buying or is it actual whole governments that are buying it? And we don't know exactly what's going on behind the scenes, but we're looking at these price spikes and it's something else. Yeah.

Yeah. So, yeah. And I know that, you know, you always hear and then people are like, well, I see these ads on TV. We buy gold or buy gold. You got to be careful about that. As an investor, we're talking about as an investor. It's one thing to own physical gold, but really as an individual investor, I don't want to own actual gold. I might invest in it, right? That's different than having to, you know, a couple of gold bars in my closet at home or in a safe, right? Right. Yeah. So again, this is not investment advice, but we... Right. Because everybody's situation is different. So you can't give specific investment advice, but just in a general form, just talking generally. Yes.

In a general form, I agree with you a hundred percent. So the reason these pawn shops and buy gold or silver commercials and places exist is because when they... buy and sell coins and they buy and sell physical gold, they typically charge a huge commission. Oh, yeah. Get into gold, silver and coins and get out is normally a pretty pricey situation. Sometimes when you're buying coins from a mint, they don't beach up too bad. But if you go to the gold shop down the street, they're typically going to rake you over the coals.

They buy it for pennies on the dollar and then jack up the price. Yeah, right.

Right. Yeah. So what we typically recommend is, you know, it's OK to invest in it. And for some clients, it is a good fit, but we prefer to do it electronically. So we'll use ETFs or funds to buy it because there's typically no cost to buy and sell it then.

Right. You can invest in precious metals without actually physically owning them. Right.

Right.

Yeah. Yeah. You invest in the gold market. And and then, yeah, it just it's better to do it electronically for most people than physically, because I just wanted to point out and I've heard this talked about and I'm a I'm a big believer. This is my personal belief. And you can correct me if I'm wrong or talk about it. But, Ken. People who are worried about, oh, man, the U.S. dollar is tanking. I foresee huge problems, you know, all this unrest within our own country and all these wars. And then people panic or if the market starts to crash, they'll pull their money out, you know, their 401(k) or their IRA or money they have invested for the future for retirement. Yep. I'm going to go to gold. I'm going to buy gold or just investing. And I know people who have actually used investment money and sold their investments and bought physical gold. But I'm like, okay, so let's say you're right and the economy does tank or we do hit another depression. What good is that physical solid gold bar going to do you at that point when people are struggling for money? You can't go down to the low corner market and you're going to like try to saw off a piece of gold or scrape off some gold to buy a loaf of bread. You know what I mean? Are you going to, you know, you're going to take that gold bar and somehow cut it and give them a piece and they'll take that in exchange for a loaf of bread? I just don't see that happening. You know, I mean, am I am I way off base here? Is this too far fetched or? I mean, there's definitely people that have bunkers and are preparing for the worst case scenario.

And, you know, I mean, you can make the case with the U.S. government debt as high as it is, you know, maybe like I can say I personally, I bought some very, very small units. you know, practically shavings of gold coins and silver coins. And just a little bit inside my safe at home, just as a like absolute worst case scenario, something standpoint, but you're right. Just stacking up gold bars is not, you know, how are you going to get out of the country or to somewhere where you could cash those things in? Yeah, it'd probably be hard to do.

And during during an economic depression or if the economy goes down or we hit a huge recession, how are you going to be able to use that for money? I mean, is somebody going to be there? Oh, yeah. I want to buy your gold and give you enough money that would be worth more than the cash you would have had. So. I don't know. I'm a little skeptical, but I'm not skeptical of obviously investing in precious metals right now. Those people are laughing all the way to the bank. If they invested in gold, say, you know, a few years ago, it's up 90 and silver is up. What did you say? Almost 200 percent.

Yeah.

Yeah. It's crazy.

Yeah. So that's interesting. That's one of my main points is that if you decide that you want to invest in precious metals, whatever you invest, be prepared to lose half. That's my advice. Because what goes up sometimes comes down and it could come down rather quickly. And I mean, there... there is industrial uses, especially for silver, you know, obviously jewelry, but like silvers and tons of, you know, it's in solar panels and electronics, cell phones, medical equipment, batteries, electric vehicles. So with all these data centers popping up all over the place, like you can, There's a good explanation there for why demand for silver has spiked significantly. But, you know, I think a big part of this thing, Tony, is just people have FOMO, you know, fear of missing out. Their friends own gold. They're making money. They're rubbing it in their face over drinks at the... the Christmas party.

Oh man, I need to get into that. The problem is, is we're at the point where it's already went up 90%, 200% silver. Now's probably the worst time to get in, you know, for, for a lot of people because you're end up buying high. And this is what happens with stocks too. Oh man, NVIDIA is through the roof. I better buy NVIDIA. So you buy NVIDIA and then you, The NASDAQ, the tech stocks take a hit and you just lost. I mean, you don't buy high.

That's the worst case scenario, right? Yeah. One thing you could do is dollar cost average. So rather than taking all your money and throwing it into something in one chunk, you Um, you know, there's a chance you get it right and there's a chance you, you strike out. So sometimes what people will do, whether it's stocks or, uh, precious metals or any other investment, just buy a little bit at a time, you know, buy, buy once a week for 52 weeks or buy once a month for 12 months. Or, you know, if you've made up your mind that you want to invest in something, maybe buy it in little pieces just in case it does crash. Um, You know, we're hesitant. Like you said, if you invested in this stuff two, three years ago, obviously you're ahead in the game. But you got to keep in mind, too, there was a period of time where gold almost made no money for 10 years. And we used to laugh at all these gold bugs who were.

Yes, exactly.

Because the stock market over that period of time went crazy.

Absolutely. The roof. Yeah. Yeah. Yeah. We do have 100 years of history with the stock market. And what is the stat? 73% of the years in the last 100 years have been positive and up. It's made money. That's a great track record. With gold, it's way, if you look at the last 100 years, not positive. It's not gold has not made money 73 percent of the time over the last hundred years. So you got to look at that. But when it does go up, it goes up. And so it's yeah. Yeah. It depends on your situation. But the answer is work with a trusted financial services professional like yourself who can look at your whole portfolio and decide, OK, this is this is where you're at. Yes, this makes sense. Right.

Yeah, absolutely. We would love to sit down or just have a quick discussion with any of our listeners or viewers. You can give us a call at 586-226-2100 or reach out to us on the web, summitfc.net. We would love to help you.

All right. Well, I'll tell you what, Ken, great show today talking about gold and silver. You know, I know this isn't specific personal investment advice today on the show, but you can get that. If you set up that no charge, no obligation consultation with Ken and the team at Summit Financial Consulting LLC. And again, I want to give that number. It's right there in Macomb County, 586-226-2100 or summitfc.net. Great show today, Ken. Yep. Thanks, Tony. All right, listeners and viewers, that does it for today's episode of Money Talks with our host, Ken Wink. Thank you for joining us for Money Talks. Don't head into retirement without a strategy that addresses both income and taxes. For more information, please contact Ken Wink at Summit Financial, working with people you trust. Call 586-226-2100 or visit SummitFC.net. Join us again soon for another episode of Money Talks.