I normally don’t pay attention to investments pitched on Facebook, for obvious reasons. But a few days ago, a very smart friend, who is also a serious investor, liked and reposted a piece entitled “Is Gold A Good Store Of Value?” Based on the credibility and wealth-building focus of my friend, I felt compelled to read the piece, just in case I was missing something.
Before I ask l you to read the short piece that was pitched, I am asking you to regard this as a quiz for you to identify potential flaws in this well-made case for gold.
In fact, I was going to name this article: “Gold vs House Value: A Highly Flawed Metric for Making Investment Decisions,” but I decided to let you be the judge.
Please put on your critical thinking cap and read the pitch (shown in the box).
Is Gold A Good Store Of Value?
Fact #1
In1970, a home cost $26,600 or the equivalent of 760 ounces of Gold.
Fact #2
Average home today in California cost $487,400 or the equivalent of 380 ounces of Gold.
Fact #3
The $26,600 saved in paper money in 1970 won't even get you a down payment on that same house today.
Fact #4
The 760 ounces of Gold saved in 1970 would purchase you the average price of a home in 1980, 1990, 2000, 2010 and 2017.
Fact #5
Gold Is Money on Steroids. Now go tell the world.
[Promoter’s website deleted from this article]
Before reading further, which statements seemed correct? Which statements didn’t pass the smell test?
A very common sales technique is to mix several undeniable truths (“facts”) with questionable statements then leverage the association of the “truths” with the questionable statements to compellingly drive home the point and close the deal with a call to action (“now go tell the world”)
The “undeniable truth” technique was used here to take you from the verifiable price of gold in 1970 with the verifiable house price in 1970 in “Fact #1” to the absolutely absurd statement in “Fact