Physical Gold, Stocks and Retirement: Your Questions Answered

Merryn Talks Money

Hosts Merryn Somerset Webb and John Stepek address listener questions regarding specific investment dilemmas. The discussion covers the util

Key takeaways

Physical gold is best utilized as 'emergency insurance' for extreme scenarios, while ETFs are effective for hedging against inflation or currency collapse.
Buying shares in small-cap companies can lower their cost of capital, providing a tangible benefit when they need to raise funds.

Main topics

Physical gold vs. ETFs
Small-cap equity impact

Notable quotes

You're holding gold as emergency insurance.

Conclusion

The episode offers practical frameworks for adjusting investment risk

Transcript preview

Speaker 2 (0:00) We don't just invest in cutting-edge companies. We look at companies with a history of steady growth. And companies whose growth cycle has come round again. Because in the real world, you have to look at growth in three dimensions. Monk's Investment Trust. Speaker 3 (0:15) AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining trade-offs shaping the future of AI. Thank you to our presenting sponsor, Salesforce, and supporting sponsors, IDA Ireland and Schneider Electric. Learn more at BloombergLive.com slash Tech London. Speaker 6 (0:48) Bloomberg Audio Studios. Speaker 7 (0:50) Podcasts. Radio. News. Speaker 5 (1:02) Welcome to Merrin Talks Your Money, the personal finance edition of Merrin Talks Money. In these bonus podcasts, we talk about the best strategies for making the most of your money. I'm Merrin Somerset Webb, and with me, senior reporter and money distilled author, John Stapp. Hi, John. Hi, Mel. John, we get a lot of emails, which we love. We love emails. Send us more emails. Today, we are digging into the show inbox and pulling out some of the questions that listeners have sent us to discuss. Okay, Speaker 4 (1:28) so the first one. Speaker 5 (1:29) is one that I know we both have firm answers to it. And it's about from someone who came from one of our friend shows in Edinburgh. And basically, he holds the majority of his gold through one of the physically backed ETFs rather than owning it directly. Increasingly, he says, he'd been wondering about the risks inherent in holding gold this way. and whether some of those risks potentially undermine the very reasons for owning gold in the first place. So he wants to know, how comfortable are we with the idea of physically backed ETFs or ETCs as a long-term way of holding gold? Now, I have a very clear answer to that, which is that you're holding gold as emergency insurance. So I think that you should have a reasonable amount of your gold in actual physical. easy to access gold just in case all the worst things really happen all at once. And then you have your gold. But Speaker 3 (2:29) you can also, you know, gold in a Speaker 5 (2:31) ETF or ETC with a good provider is a pretty safe way to do. Yes, you are inside the financial system. Yes, you do have custodian risk and management risk and financial risk to the extent it's entirely possible that your provider. might become insolvent, might go bust, and then it'll be difficult for you to reclaim your money. But the gold is there. The gold is there. And while you don't have an individually allocated bit of gold, you have a share of the existing gold. So are there risks with it? Absolutely. But the gold is there. So yes, you should have a reasonable amount, I think. physical gold because one of the reasons for holding gold is because terrible, terrible things can happen. But if you're holding it as a protection against inflation or the general collapse of fiat currencies or repression that doesn't involve seizing gold, then it's a perfectly good way to capture that upside. Is that fair, John? Speaker 4 (3:33) Yeah, I do think that's fair. I mean, I think in a funny kind of way, there's a risk appetite thing going on here. And the honest truth is that I am not so worried about the physical side. I definitely take