As I write this, gold futures have surged to their highest level on record – topping $1,900 an ounce. This is a record high, surpassing even the height of the 2008 financial crisis and its aftermath. There are many reasons why investors are clamoring for gold, starting with fears of a pandemic-driven recession, rising unemployment and social unrest. We’re also experiencing near-zero interest rates and equity market valuations that seem disconnected from economic reality. Then, there are concerns that Federal Reserve stimulus policies will flood the system with liquidity and lead to inflation. And, don’t forget about escalating tensions between the US and China.
Whatever the reason, gold’s extraordinary price has risen nearly 68% in the past five years and has surpassed levels not seen since 2011. Unfortunately, at the current high price level, the traditional means of owning gold are largely out-of-reach for small individual investors – the very group that is most in need of the financial stability and peace-of-mind that are key features of gold investments. At current levels, even one or two ounces of gold could be a stretch for many small investors.
It is possible for the average investor to gain exposure to gold through exchange traded funds (ETFs), which are relatively low-cost, liquid vehicles and facilitate trading. A newer solution uses blockchain technology to create and manage fractional ownership of gold. One drawback to ETFs, fractional ownership and similar solutions, however, is that they don’t permit physical possession of the metal. A primary reason to own gold, for many investors, is its historical role as a safe haven during times when the world is in financial turmoil.
By holding physical gold, the investor “owns” its full value and has no counterparty risk. For retail investors who are determined to hold physical gold, what’s needed is a way to own the metal in small, affordable “everyday” increments. That led to the creation of the Aurum® – an instrument that encases a thin sheet of gold between protective layers of polyester film. The precise quantity of gold in an Aurum – which can vary from one gram all the way down to one-tenth of a gram, depending on price – is verified through rigorous testing by independent laboratories.
The advantage of an Aurum is that it allows the average person to own physical gold in a note that’s similar in size and thickness to a US dollar bill. Owning an Aurum offers the same benefits as a gold coin or bar, but in a more affordable, portable and exchangeable form. Values can range from $3 to $150, comparable to the denominations of paper currency, making it possible to use an Aurum for a purchase or other transaction if desired. The gold can even be melted down and recovered. And, because an Aurum can be purchased in very small increments, a person can accumulate a position in gold gradually, similar to putting away a few dollars each week in a savings account.
As has been true throughout history, investors often turn to gold in times of uncertainty – shifting from more vulnerable assets in search of financial security. Over the years, many innovations in the financial markets have helped democratize investing – from mutual funds, to ETFs, to online brokerage accounts and robo-advisors. For those who desire the security of gold at an accessible price, the Aurum is an innovation that brings gold ownership to the retail investor.