Your Pension Fund Should Include Gold – Here’s Why

Employers and tens of millions of Americans contribute money to pension plans every month, relying on those savings to increase and be there for them in retirement, but there’s a ticking time bomb there. The vast majority of pension plans in the United States are woefully underfunded, and their assets are frequently allocated to securities with poor prospects for yielding returns that keep pace with a general loss in buying power.

The comments above and below are updated excerpts from an article by Jp Cortez which has been edited ([ ]) and abridged (…) to provide a fast and easy read by munKNEE.com.

A History of the Pension Plan

• In 1875, the American Express Company established the first private pension plan in the U.S..
• By 1929, 397 private sector pension funds were in operation throughout the U.S. and Canada.
• As of 2019, according to the Bureau of Labor Statistics, 22% of private sector workers were covered by pension plans, but that number has declined from 31% in 1989.
• Only 22% of private sector employees participated in a registered pension plan in 2019, which is down from 31% in 1989.
• At the end of 2022, the value of employer-sponsored pension funds was $26.3 trillion.

Pension Fund Managers Are Failing to Safeguard Funds

Pension fund managers have a fiduciary duty to safeguard funds against foreseeable risks, but with the practices of today’s Federal Reserve, there is no risk more foreseeable than inflation, and these fiduciaries are not fulfilling their duty to protect against this significant risk by investing in assets that are specifically suited to defend against the perpetual loss of the dollar’s purchasing power. Chief among these assets are physical gold and silver.

Correlations between inflation and real investment returns for different asset categories, 1900–2022

Copyright © 2023 Elroy Dimson, Paul Marsh, and Mike Staunton

Continuing Dollar Devaluation is a Given

The devaluation of the dollar has lost more than 96% of its value since the creation of the Federal Reserve in 1913, and there is no reason to expect this trend to reverse. In fact, a total collapse of the dollar at some point cannot be ruled out. This is important because of the dollar’s inverse relationship to the price of gold.

As the unbacked Federal Reserve Note continues to be abused and devalued, it becomes clearer every day that pension funds should increase their precious metals holdings, but, according to the Asset Allocation Survey by the U.S. Council of Institutional Investors, only:

• Less than a third (31%) of respondents hold an allocation to gold, and of those that do,
• 69% only had an allocation between 1-2% of their overall portfolio maintaining that is
• because gold “delivers no income or dividends, and it costs money to store. It also does nothing to match assets to liabilities.”

Conclusion

The financial establishment remains hostile to gold, and getting fund managers to include physical gold in pensions is a difficult challenge. While they have a fiduciary responsibility to protect and grow their clients’ investments, most prefer to stick with conventional wisdom and avoid bucking the system.

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