Timeless Wealth: Gold & Life Insurance – Episode 653

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. We’re gonna be talking about precious metals and we’re gonna be talking about assets that last for centuries. Those are connected. Kim, first we’ll have to state time just so that people know. We’re middle of December recording this because of the holidays. We’re getting a little advanced by a couple of weeks. Silver is in the mid-60s. Gold is at 4,300 and some change. Insane, right? Yep. Okay, give us some glimpse of what’s going on because some people are just going nutty about it and there’s also other, call it areas where money is held that’s been held for centuries that is having record-breaking announcements,

[01:00] profit distribution, things like that. Bring us all in because people need to know what’s going on. Well, a friend of mine, Julianne, has a fabulous question that applies to when people are interested in purchasing things like gold and silver or any financial product, frankly. And it’s, and then what? And I heard her at an event work somebody through the conversation around purchasing gold. And she said, and then what? And they answered, you know, I’ll hold it. And then what? Well, I’ll, you know, and they kind of lost track. And as we know, if you go seven layers deep on a question like that, you know, same as asking why, seven layers deep, you’ll actually get to the heart of the true answer

[01:56] that the person is living with. Well, you know, this went on for two, maybe three layers and the person couldn’t go any further. And so it really brought home to me something that I’ve felt forever and ever. And full disclosure, I have never owned gold or silver other than the ring that I have on my hand and whatever silver dime that may have passed through my wallet at some point. It is because you can’t answer the question. And then what? Because to me, when we’re looking at anything that stores value, so let’s separate out this discussion here for a minute. Clearly, we look at some monetary things as spaces that are supposed to grow value. And then we look at other monetary things as places that we want to store or hold value.

[02:55] And so in general, you could say there’s the investment world and then there’s the savings world, savings as a noun, the act of storing wealth. So interestingly enough, gold can absolutely sometimes fit into both. And that’s why people get so excited about it is you can absolutely purchase it at some price and have it go up to some other price. And then what? Are you going to sell it? Or let’s say it sits steady for a long time in a price range. And then what? Are you going to sell it? Or let’s say it goes down. And then what? Are you going to sell it? Or maybe you have an emergency and you need that money, that gold turned into dollars that you can do something with. And then what? Are you going to sell it?

[03:42] What if you need it to buy food? And then what? Are you gonna trade it? I mean, it’s just such a great way to get us human beings who are very short-term thinkers, no matter what we do, it is very difficult to think long-term. It forces us to think long-term. And I’ve even heard people say you really shouldn’t buy an investment until you know what you’re going to and how you’re going to sell that investment when the time comes. So I think that’s some really good discussion. So that’s on the investment side. Switching gears to the savings side or the storage of wealth side of the capability that gold has is, again, begging the question, and then what? Because typically, when we think of storing wealth,

[04:32] we think of savings, we think of emergencies that we want to solve, we think of maybe opportunities that we want to take advantage of, my age-old combination of those two words, emergency slash opportunity fund. And for that, we need liquidity. The savings is a space that needs to be liquid. And I have people all the time, well, my stocks are liquid. Oh, are they? Are you going to sell them if they’re down? Well, gold is liquid. I can sell it any time. Are you going to do that if it’s down? And we just don’t think about that. So you asked about, are there other spaces that are late in this calendar year making announcements about the amazing rate of return slash dividend slash growth that have occurred

[05:21] in that space within the last year? And the answer is yes. The Mutual Life Insurance Company dividend announcement occurs at this time of year, late November, middle of December, all the mutual companies, Mass Mutual, Guardian, New York Life, Northwestern Mutual, Penn Mutual, Forrester’s, Lafayette Mutual Trust, can’t think of any others off the quick top of my head. All of those mutual companies, mutual meaning we’re owned by the policy holders. If you purchase a life insurance policy at Guardian or Mass Mutual or any of these mutual companies, you are an owner of that company. Every single one of them have announced record earning dividends and they did it last year and they did it the year before

[06:13] and they did it the year before. Now, as we know, that’s no promise that they’re going to do it next year. Nevertheless, that is a centuries old environment that have existed in this country and in other countries for centuries. And so with the knowledge, and a lot of people do not know this, that the asset called life insurance, so you have to split life insurance up also into two categories. One is an asset that builds cash on your books and is called whole life, W-H-O-L-E. And the other is term insurance, which is not an asset, it’s an expense and is protection, just like car insurance or home insurance, but not an asset. So when you have an asset, and you’re an owner of the company either way,

[07:06] but when you have term insurance, you don’t typically get the dividends. So when you have an asset and you get the dividends, this is an important time to be grateful for. In fact, I had a good long time, probably 50 years in the business, friend of mine say to me in 2008 and again in 2020, when I looked at my entire list of assets, there was only one asset that actually increased that year and it’s my whole life. Because not only does it have the potential for dividends, it grows on a guaranteed basis, even if no dividends are paid. And it’s so valuable to know that and K-N-O-W that, like to really know that we know what we know and to be super, super confident because cash value, the asset that is on the books,

[07:57] whether it’s on your personal books or business books or LLC books or what, in a trust is liquid. As of like two or three days timeframe liquid and not because it’s gone up or down just because it is. And so knowing this and the fact that these companies have declared larger dividends than last year and last year was larger than the year before is a very valuable, very peace of mind orientation that we can be so grateful for and rely on. And because it uses actuarial science and the principles of the law of large numbers and both early death and late death as a structure, a framework if you will, for decision making that actuaries do, we can be super, super confident in it because death is a guaranteed event

[08:51] and that enables these insurance companies, not because of their investment ability, but just because of their business model to pay those higher and higher dividends. And again, who knows what they’re gonna do next year, but because of their business model, which is collect premiums, collect premiums, right? Ongoing cash flow, something that we’ve talked about numerous times on this podcast, that enables them to have a very profitable structure of all that cash flow coming in. And then of course they pay claims. If you go look at these life insurance companies claims paying abilities, it’s very high because death is not something negotiable. You can’t figure out like, well, whose fault it was,

[09:37] or I mean, you can figure it out, but it doesn’t matter. Or did this house really burn down or did you burn it down? Are you disabled or not? All the things that are typically negotiable in the insurance space are not negotiable in the life insurance space. And so because of that guarantee and the law of large numbers and the actuarial science and the cash flow, these are extremely profitable companies. Very profitable. You know, you’ve talked about the gold and silver and the thinking behind it. And then the history, the centuries history of these life insurance companies, mutual backed life insurance companies. We have to be specific on that because you were intentional with those words. I wanna make sure I’m intentional as well.

[10:26] What happens is that we’re living in a world of unprecedented times, meaning this is recorded in December. It comes out in a couple of weeks because of the holiday. We don’t know what that will look like. It could be completely different than we expect. The US government could be firing up the presses and throwing out more money than, I mean, they’re not actually, it’s not literally doing that, but we know that what that means. And again, like there’s so many things that happen, yet you in previous episodes, you’ve referred to not what’s changing, but what’s not going to change. Yes, and as human beings, it’s kind of nice to have a few things that are not going to change. Because almost every aspect of our lives

[11:20] and especially in today’s world is going through tsunamis of change. And so it is absolutely nice to be able to pin our trust on something that will not change because it has not changed, other than to adjust with the times. And insurance companies are doing that. They’re, for example, enabling you to actually look at your policy more than once a year and do other things in the technological space that are important. But the actuarial science foundation, that principle that brings forth that confidence, that KNOW that we know what we know is just very peace of mind orienting. Yes. I want to throw in two warnings that I see I think will be helpful as we wrap up. I’d love to get your feedback on it.

[12:15] And it’s this, the warning that happens with gold and silver, and I actually, I enjoy it. I started doing that stuff when I was a kid. So it’s kind of one of those things I just remember from childhood moving forward. There is a transaction loss that will happen. And I think a lot of people forget that because they just remember I bought it at this and I sell it at this, but they don’t forget, they don’t think about the losses because there’s going to have to be profit when you sell it. And there’s going to have to be profit made when you buy it. So you have to take that in. So that’s one piece in there. But when we’re talking about change, there’s one thing that can change in our lives, and that is our health.

[13:02] If we are looking to set up those insurance policies, if we have good health standing or wherever we are right now, that can change. And if we delay, if we procrastinate, that change may make it impossible for us to move forward. So action has to take place. And the loss, the transaction, just like on gold and silver, the procrastination loss or the transaction loss, if you do delay, you may not be able to play. Yep, that’s a great quote. If you delay, you may not be able to play. It is so apropos to bring that up because we actually just had a family situation where not our family, but somebody was insurable one day and they were not the next. And they didn’t die, but they were not insurable the next.

[13:59] And so it begs the question, can you buy gold tomorrow? Me answer is absolutely yes. Can you buy silver tomorrow? Yes, can you buy your 401k tomorrow? Can you invest in this, do that? Yes, yes. Can you buy life insurance tomorrow? And the answer is maybe, right? So it is super helpful. I do also wanna share a book that I am currently reading and it’s a lengthy one, but valuable. And it’s called The Gold Standard and it’s by Dr. Safedin Amous. The last name is A-M-M-O-U-S. And his work is somebody that, he’s a Columbia educated economics professor and has written a variety of books. He’s definitely well known in the Bitcoin space. And this book called The Gold Standard, An Alternative History of the 20th Century

[14:51] is actually a combination economics, history and novel. And a very interesting read. I’m only about halfway through it and I’m enjoying it very much and find it very helpful as it relates to what we’re dealing with today. Ooh, good, I like it, I like it. Kim, thank you so much for sharing principles that will be lasting for a long time. We’re not just talking about little blips in the system. This isn’t something that we get excited about today and then it’s gone tomorrow. So I appreciate it. For any of you listeners that need to have a question, something a little bit deeper about maybe if you can qualify medically or figuring out things, go to hello at prosperitythinkers.com and you can get all of the information there.

[15:37] Thank you for spending the time with us, Kim. It was awesome, a lot of wisdom. Thank you, Spencer. And thanks to all our listeners. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit prosperitythinkers.com.