Sen. Bob Menendez, allegedly accepted gold bar bribes, prosecutors allege, according to a newly unsealed federal indictment.
Wait, you can own gold bars?
Yes. It’s actually a booming trend.
(Spokespeople for Menendez didn’t respond to CNN’s request for comment. Separately, he released a statement on Friday calling the indictment part of “an active smear campaign.”)
Bank failures this year led to a surge in demand for gold bars and coins
Demand for gold was already on the rise as people sought ways to hedge their investments against inflation. Since gold is a tangible asset with a limited supply, it offers that stability.
Then, a string of bank failures, beginning with the demise of Silicon Valley Bank earlier this year, added to the momentum.
It was “a wakeup call” to many people, said Jonathan Rose, CEO of Genesis Gold Group, a precious metals firm in Beverly Hills, California. “There was a feeling of helplessness,” which he said he could attest to since he had money deposited at Western Alliance, which came under a significant amount of stress in the wake of SVB’s collapse.
“A lot of people were fearful thinking, ‘Maybe my money is not as safe as I thought it was in the banking system.’” As a result, interest in owning gold jumped as people searched for tangible stores of value that “can’t evaporate,” Rose told CNN.
The value of a kilogram of gold hit a one-year-record high of nearly $66,000 in May, according to data Goldprice.org.
Data from the World Gold Council supports what Rose witnessed.
Demand for gold bars and coins in the US hit a 13-year high in the second quarter, according to an August report the Council published.
“The after-effects of the banking crisis supported demand early in the quarter, as did the tense US debt ceiling negotiations,” the report states. (In the spring, the US government came very close to defaulting on its debt for the first time in the nation’s history. Ultimately, default was avoided in an 11th-hour deal, but it caused Fitch Ratings to downgrade US debt two months later.)
Demand has since slowed down, but it will “likely pick up again should any signs of banking instability reemerge and on approach to the 2024 presidential election campaigns,” according to the report.
Even though you can invest in gold and other precious metals without physically owning them, people tend to prefer “having the currency in their hands,” said Rose.
That’s because if, for instance, you invest in a gold ETF, “it’s still tied to the market,” he said. That means if the market were to plunge, you’d be exposed to it and suffer some losses as a result.
Plenty of his clients have buried the gold he’s sold them in the ground, he said. One even stored it in an empty paint can in their garage. Other people who prefer to keep gold under their own roof store it in a gun safe or floor safe, he added.
For added assurance, you can take out an insurance policy or keep it in a safe deposit box at a bank, but most of his clients opt not to, he said.
However, people who want to invest in IRS-approved physical gold in their tax-deferred investment accounts by law are required to keep it in a bank or with a non-bank trustee.
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