Why South Africans invest in silver & gold: Expropriation of land without compensation
While redistribution of wealth (whatever this means strategically) is certainly an obligation if South Africa is to avoid an inequality gap that may lead to civil war, many South Africans of all races don’t believe that expropriating land is the answer. Talk of the expropriation of land without compensation makes many people nervous, not because of their lack of interest in the plight of the poor, but because of its ethical and social implications. Can the government be trusted to draw a line in the sand and commit to expropriating only certain types of land (such as empty productive farmland)? Or once some land and farms have been redistributed, is it a matter of time before certain residential and commercial properties will become fair game, too, in the name of addressing inequality? Many ridicule such theorization. But too many laughed 20years ago about the possibility of expropriating land without paying the owner for it. On the basis of this consideration, many investors are choosing not only to stay away from property (residential, commercial and land) but are actively exiting the property market by selling investment land and properties. So have I. After all, considering the uncertainties about the exact nature of expropriations, having a substantial part of one’s wealth in property is simply too risky. In this context, the value of precious metals becomes rather irresistible. For those looking for safe-haven assets, silver and gold represent a safe form of wealth-holding relative to land and property. It is wealth that is outside the banking system –and thus, quite literally, it is wealth you can hold in your own hands. Over the years, many of my clients have used the profits they received on the sale of a property to purchase silver and gold as a pre-emptive wealth-presentation tactic. Land can be expropriated, it seems, while silver and gold are not so easy to take. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
Why South Africans invest in silver & gold: Nationalisation of the banks and Reserve Bank
Precious metal investors are not nutty conspiracy theorists who are anti-government or anti-ANC. Rather, they are hard-working people who are anxious about what it means for the broader economy to have a nationalized Reserved Bank. For example, in 2017, Public Protector Busisiwe Mkhwebane recommended a mandate change of the SARB from supporting the value of the rand to a broader mandate that is more developmentally focused. In simple terms, Mkhwebane suggested that the Reserved Bank print money to lift the masses out of property. However, this is not broadening the mandate but doing precisely the opposite of protecting the value of the rand. Because printing money does not lead to more wealth – its leads to higher inflation and a weaker currency. While this recommendation has not been taken seriously and is not currently an official policy, many investors are concerned that the initial suggestion is a way of introducing ideas to the public in smaller doses to avoid strong opposition. Given these realities, an idea that many of my clients expressed over the years is that by buying precious metals, they become their own reserve bank – in order words, purchasing silver and gold puts them on a personal gold and silver standard. This is an interesting and novel way to view precious metal investments. Their strategy is therefore not to invest in silver and gold as a speculative mechanism, but instead to gradually accumulate gold and silver as a reserve currency and a form of insurance. South Africans, who own ounces are in a secure financial position and, together with their families, will remain economically protected from poor policy decisions. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
Why South Africans invest in silver & gold: Retirement/Pension Fund Mismanagement
Most South Africans, regardless of race, know the story. Mismanagement of money that is owed to millions of civil servants for a lifetime is theft of the highest order and is an elaborate and deceitful way of forcing the middle class to pray for misconduct by the upper class and the well-connected. As Natasha Mazzone expressed in Business Tech, “it is very easy to be a socialist with other people’s money. It is very easy to have communist leanings when you have millions of other people’s rand to play with. Not only do many South Africans worry about the misappropriate of pension funds through bailing out struggling parastatals, but they also worry about proposed legislation for rules on provident fund payout: ‘you will only be able to withdraw a third of your provident fund savings as a lump sum upon retirement, while the rest has to be invested in an income/annuity fund that pays you a monthly income. In my discussions with clients who are due for a provident fund payout in the years to come, I have picked up anxiety over this rule. Their concern is that even after a payout, as provident fund beneficiaries they are still beholden to the government for most of their monthly income. Should the government make unwise investment decisions with the provident fund, their income will suffer. This adds to their worry about the various forms of wealth tax the government could levy on any funds they hold. Silver and gold investors who own wealth outside these institutions are in a less precarious situation. I guarantee that the person who owns even a small portion of the total value of their retirement fund in precious metals savings sleeps better at night than the person who is fully reliant on the government for retirement income. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
