There is an Exception to the Rule

Gold isn’t an investment, gold is money. If gold goes up 100% or 150% you really aren’t ahead, but you can keep up with rising prices.

That’s the general perception of gold. But, as in all things, there is an exception to the rule. I’m going to tell you a story now, one that will show you how to take advantage of gold’s rise in a way far more beneficial than merely “treading water.”

In late 2004, we finished paying off our mortgage on our home in St. Louis Park. This was the first time in our 40-year marriage that we had no debt. We bought a bottle of Champaign to celebrate. No more house payments! This was great.

However, we were also very close to building a new house. Just a few months after being debt-free, I took out a million dollar plus loan to start construction on a new house in Deephaven. From no debt to over a million dollars in debt just like that. This was a real shock for Susan. She read Richard Russell every day and had a great deal of confidence in what he had to say – and Russell was saying the thing to do was eliminate all debt. How could we justify this? We had enough assets (primarily gold and silver, but for the sake of this discussion let’s just say it was all gold) that could be sold and the proceeds used to pay cash for the new house. Why not follow Russell’s advice, sell the gold, pay cash for the house and have no debt? That is the question I had to wrestle with.

At the time, gold was $500 an ounce. I would have to sell 2000 ounces of my gold in order to buy the house without a mortgage. But my belief in gold and confidence that the bull market had a LONG way to go convinced me that it was foolish to sell the gold at that time and that the debt wasn’t a bad thing (sorry Russell).

Read More at milesfranklin.com . By David Schectman.