Newsletter Introduction
By Chris Cassidy
IN 2025, PRECIOUS METALS WERE one of the best performing asset classes. Gold returned over 60% for the year and silver over 100% for the year. Demand for precious metals has increased for a multitude of reasons such as a weakening U.S. dollar, global central bank activity, concerns about global government deficits, geopolitical uncertainty, and fears about inflation.
My personal experience with precious metals began in 2009. A friend of mine, who is a real estate investor, was looking for a short-term loan to close on a property. I agreed to lend him $15,000 at an interest rate of 4%. We executed a promissory note and one year later, I was paid back. However, my friend had been doing a lot of research into precious metals and insisted that my principal be paid in physical gold as opposed to a check. He was concerned about fiat currency and thought gold would perform well.
For an entire year, I had a cardboard box with physical gold hidden in the back of my bedroom closet. Thankfully, the apartment was never burglarized!
In 2011, I decided to purchase a home, and I exchanged my gold for cash. At the time, gold was selling for $1,600 an ounce. My friend had made a smart investment call on my behalf with the price of gold appreciating considerably during the time it was taped shut in a cardboard box under my t-shirts. Unfortunately, I learned you must pay a 28% collectibles tax when you sell gold, as opposed to the 15% on long-term capital gains when you sell a stock.
When I first joined Trust Company of Vermont in 2004 as an intern, I was given a copy of the 3rd Edition of Stocks for the Long Run written by Wharton Business School Professor Jeremy Siegel. In the book, Siegel compares the long-term performance of stocks to other asset classes such as cash, gold, bonds, and real estate and concludes that stocks offer the best returns over long periods of time.
Based on this and other similar research that I read at the time, I didn’t feel badly about selling my gold as I figured the stocks in my 401(k) and IRA would do much better.
Lately, watching gold climb to $5,000 an ounce, I started to feel a little worse. My mood improved slightly when I did the math and noted that stocks, as measured by the S&P 500, still outperformed gold since the purchase of my home, which I still live in today.
Precious metals are an investment class that can be complicated for financial professionals to evaluate as they do not have the cash flows typical of a stock, fixed income, or real estate investment. Devon Walsh has written an article this quarter on gold and the complexities in valuing the commodity. Devon holds the Chartered Financial Analyst (CFA) designation and does a lot of equity research and financial analysis for our Investment Committee. He is very knowledgeable and I don’t believe he has any gold in his closet.