Recently I wrote an article about a Jim Rickards interview I listened to on the Coast to Coast AM radio show. If you don’t know who Jim Rickards is, then you should do yourself and your retirement portfolio a favor and look up his biography and accomplishments. Then you should buy his new book and read it. His book is titled The New Case For Gold, and during the interview, Jim spoke about his book and took questions from callers. One caller brought up the gold vs land argument, and that old argument is going to be the focus of this little article.
If you own a few acres of land I think you will agree with my points. If you do not or have never owned acreage, you may find some of the things I have to say interesting and the way you view land ownership may change.
Gold Vs Land: Gold Is A Useless Rock But On Land You Can Grow Food.
In essence, this argument is a version of the “you can’t eat gold” argument. You can use land to grow food. You can raise chickens and cows for eggs and meat as well. Land can be used to grow crops and vegetables. If the land is over a natural water reservoir or aquifer, or if the land has a creek flowing through it, then you may have water as long as you have water rights. Water rights, or riparian rights, do not necessarily go along with land ownership. Growing crops and sustaining life requires water. Much of the rural land in the US is not served by water utilities or electrical utilities for that matter. Septic tanks are the norm since sewer service is really a city thing. Trash collection is either expensive or non-existent.
In essence, before you can raise chickens or grow beans, you have to be able to sustain yourself in the middle of nowhere, physically and financially. You also have to be willing to become a farmer and/or a rancher. Not everyone is cut out to be a farmer and a rancher. Not everyone is cut out to be even a gardener. If you don’t like dirt roads and having to drive a 4×4 country life is not for you either.
As you might expect there are sizable expenses that come with all of the necessities of country life, many more expenses than just the cost of the land itself. Gold, on the other hand, is about $1250 an ounce as of this writing. Compared to buying or building a farm gold is dirt cheap, pun intended. Gold is also much more likely to appreciate quicker than land, and of course gold is easier to sell than land. You can liquidate all of your gold in an afternoon, when of course it takes weeks or months to sell land usually. In the Gold vs land argument, gold holds a few advantages.
Gold Vs Land: Can You Really Own Land?
This is a good question. Do you really ever own the land? In America, we have property taxes. If you don’t pay the property taxes, the government will either foreclose on the land and property, or they will sell it to anyone willing to pay the back taxes. Where I happen to live, the county raised the land taxes by 100% last year alone. 100% is a big jump in one year and there is nothing to keep the taxes from being raised again next year. And I happen to live in one of those states that will sell your land for the balance of the back taxes due.
Gold, however, is a private hard asset that can be owned. There are no taxes due on it every year. There are no limits as to how much gold you can own either. You may not think there are limits on how much land you can own, but there are. For instance, in Arizona where ITM Trading is located and has been for twenty years, only sixteen percent of the land is available for private ownership. The rest of Arizona is either federal land and parks, ( think Grand Canyon) State Parks, or Indian reservations.
In addition, because railroad deals gave land to railroads in one square mile tracts, much of the land that is available for sale is only one square mile or less in size. One square mile is equal to 160 acres. The state you live in may have unusual land availability. You never know until you begin looking into purchasing land what is truly entailed.
Gold Vs Land: Apples And Oranges?
Gold is easy to purchase. In the case of gold bullion, all gold is similar. In the case of rare American gold coins, all gold coins are not equal, just like no two pieces of land are exactly the same. Gold offers diverse markets, whereas land is a very specific and defined market requiring a dedicated buyer. Gold has a very active worldwide market of buyers that never close.
You can’t eat gold. You can’t grow corn on a piece of gold either. But gold is portable and easy to buy and sell. Gold is also likely to return financial gains. Gold is a currency and an asset. Land is an asset, but land is also a tax liability. Everyone agrees that farming is hard work, too. In the gold vs land argument perhaps what we really find out is that we have an apples-to-oranges comparison. Maybe what we learn from looking into gold vs land, is that having some of both is ideal.
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Chief Market Analyst, ITM Trading