The first stock exchange was established in 1602. The real estate industry as we know it has its roots in property rights established in the 1800’s. But at least as early as 600 BC, humans have used gold as currency.
Rare, beautiful, and malleable, every society has treated gold as a valuable asset — even isolated societies that couldn’t possibly have gotten the idea from anyone else.
And yet a 2019 survey by the Fed revealed that a mere 10% of American households had any kind of exposure to this most ancient and durable of asset classes — gold and other precious metals.
This fact continues to astound Simon Popple, founder of Brookville Capital, recognized expert in the gold market, and author of the beginner-friendly book Investing in a Recession: Time to Think About Gold.
“It’s an asset class that very few people — and I mean very, underlined in bold — have got any exposure to,” Popple told Michael Duncan of the Road to Financial Freedom Podcast, “which is amazing.”
Checkmate For Real Estate and Stocks
Uninspired by school, in his youth Popple might have been mistaken for a lesser intellect were it not for chess. Behind a chessboard, he revealed a preternatural knack for strategic and intuitive thinking.
“People I used to beat at chess went on to Oxford and Cambridge and top universities,” he said, “but I was just never passionate about conventional education.”
Popple’s career began relatively conventionally — if impressively — in corporate finance and real estate, eventually rising in his 30s to become the youngest director ever of one of the world’s largest private real estate firms.
But then, accustomed to looking several moves into the future on the chessboard, Popple decided to do some math … and was startled by what he discovered with respect to the investment vehicles his employers championed.
“I was slightly horrified about how inflation can impact your long-term savings, pension, whatever it is,” he said.
Shocking his peers, he abandoned his prestigious real estate career and focused full-time on precious metals. “I really wanted, uh, an asset class which was less exposed to, um, interest rates,” Popple said. “In these sort of, um, challenging times, uh, you know, gold is, uh, it’s, you know, it’s proven, it’s been around thousands of years.”
Gradually becoming a leader in the field, Popple was eventually invited to write for various prestigious financial publications. Today he’s a regular contributor to and source for IG Index, Stock Head, and other prestigious financial brands.
Cut It In Half, and What Do You Get?
Popple is clearly fascinated by the unique qualities of his favored asset class. “It’s probably the only asset I can think of that is universally valuable,” he said. “You can cut a gold bar in half and you still have the same amount of gold. Whereas if you cut a diamond in half, you have a dramatic impact on its value.”
Compare that to real estate. Cut a house in half, and you reduce its value considerably. “I think you’d probably find the owner would be quite cross as well,” Popple said.
Gold and real estate are both real assets, making them good hedges against inflation. But Popple recognizes another advantage of gold over real estate.
“If you’ve got a property in one city and you’ve got exactly the same property in a different city, they’re worth different amounts of money,” Popple said. “They probably cost you the same to build, but they’re worth very different amounts of money because the land is worth different amounts of money.”
“What I like about gold is it’s portable,” he said. “If for some reason I decide I want to go and live somewhere else, I can’t take my property with me, but I can take my gold.”
An Entire Team of Wide Receivers
Don’t make a mistake — Popple still likes real estate. He doesn’t see the need for it as an “either-or” prospect. It’s just one more asset to include in your portfolio, one that can perform a different function than other assets because of its unique qualities.
Popple compares a diversified portfolio to a football team. Each teammate performs a different role — takes different actions with different levels of risk and reward — but you can’t have an entire team of linebackers or wide receivers and be successful. (Popple is British, so he has to specify that this is “American football.”)
That being said, gold doesn’t have to be boring and inert. Popple emphasizes that as investors acquire experience, the gold industry can fill many roles in their portfolio — from safe and simple physical gold or the GLD index; to the real estate required to mine, refine, or store gold; to speculative high-risk-high-return mining operations.
“I picked a company called Chalice Gold years ago that went from 15 cents to over $10,” Popple said. “Super high risk, but phenomenal returns when you get it right.”
