Giving Yourself a Raise in Gold — Outlook On Gold Investments
One of the hardest things to do is to ask for a raise.
You look at how much your job pays elsewhere. You prepare your case to show you bring value to the company.
You arrange to meet with your manager for ‘the talk’.
It can be make or break for some.
Things can get awkward if your manager refuses. Do you stay in your job and signal you are not worth what you ask for? Or do you take the risk and quit your job?
Many avoid this risk altogether. Instead, they simmer away in their minds, feeling they are not getting a fair deal.
What if you can give yourself a raise?
I am not talking about going out and starting your own business. Not everyone is an entrepreneur.
Sometimes you just have to be smart with the hand you’re dealt.
Rising income, falling pay
The average income is rising steadily. But your actual pay is falling.
No, not because of rising taxes.
The cost of living is rising, no doubt about that.
Many think that the Consumer Price Index is a good proxy to measure the cost of living.
I beg to differ. You can go back to this article where I explain why.
Gold is a reliable measure of wealth. It has been for over 6,000 years.
People have saved in gold for generations, all around the world. I believe that is a strong testament.
What trend do you see in your income when it is measured in terms of gold?
The Australian Bureau of Statistics reports that the average total earnings of someone living in NSW rose from $36,500 in 1994 to $94,600 in 2020. Income is rising steadily at 3.73% pa.
This may sound OK. The Reserve Bank of Australia (RBA) targets inflation at 2% pa. And the latest figures from the RBA say inflation is 1.1% pa.
You would redefine gullible if you believe these figures.
Truth is that your income is not helping you stay ahead of rising living costs.
You will see from the chart above that your income is falling in gold terms. Your income is buying you less gold since 2005.
The average NSW worker was earning less than 40oz of gold a year since late 2019. In 1994 terms, that is an income of around $25,000.
You may argue that this is because the price of gold rose significantly from late-May 2019 — so gold is overvalued, not your income.
Your argument is valid.
I will then ask the next question, ‘Do you think property is overvalued?’
This is where I might get a divided opinion.
I will let the numbers do the talking.
The chart below shows the relative prices of Sydney property and an ounce of gold from 1989 to 2020:
Source: Brian Chu
You can see that Sydney property prices rose earlier from 1995 to 2003 before gold caught up from 2005 to 2008. Sydney property then rocketed up ‘til 2017 before cooling down for two years.
Gold again surged in 2019 and overtook Sydney property once more.
Housing affordability is a hot topic.
But I think a hotter topic should be the falling real income in terms of houses and gold.
Many people seem to miss this because they never thought of it this way.
Gold is a good manager, pays well
Have you ever wondered how life would be if your employer paid you in terms of gold, not dollars?
The average NSW worker was receiving 70oz of gold in 1994. They got a consistent raise from 1994 to 1999, to 90oz.
Life was pretty good from 1999 to 2005, as the average annual income was 90–100oz of gold.
Compared to the last 25 years, where the average annual income was around 70oz of gold.
How much would this equate to in Australian dollar terms?
You can see in the graph below:
Your income did not move much from 1994 to 2004.
However, you can see income rises quickly thereafter. You would see the average income exceed $100,000 in 2011.
It stays pretty much above that even as the price of gold came down sharply from April 2013 to December 2014.
You get another massive raise from mid-2019 as gold took off above $2,000/oz.
The price of gold is $2,440/oz right now. 70oz of gold is worth more than $170,000.
I do not know a lot of people making that income from their job. A dual income household might manage to earn this.
I know this argument may be too simple. You can use other commodities and come up with another conclusion.
My point is straightforward though. The case for gold is solid, especially since it climbed hard in 2019.
You can agree that the average worker would be better off getting their salary in gold than with Aussie dollars, even without that 2019 rally in gold.
Gold can secure your wealth. Gold investments can put a rocket beneath it.
You can check out my work here. I have published a few special reports showing you how to profit from gold investments.
Those who like to have property investments should check out Catherine Cashmore’s work. Here’s the link.
On that note, enjoy your weekend.
Editor, The Daily Reckoning Australia
PS: Discover what is probably the easiest way to start investing in gold in Australia. In fact, it’s as easy as buying a book on Amazon! Click here to read the FREE report.