On Tuesday, Sen. Bob Menendez was found guilty on 16 counts including bribery, extortion, wire fraud, obstruction of justice and acting as a foreign agent.
A key piece of evidence prosecutors presented to jurors during the nearly seven-week-long trial was the gold bars the FBI seized from the senator’s home which he and his wife allegedly received in exchange for acting on behalf of foreign government officials and business people. Menendez maintains his innocence and plans to appeal the verdict, he told reporters outside the Manhattan courtroom on Tuesday.
The discovery that Menendez owned a hoard of gold bars stunned many people. Who even owns physical bars of gold these days?
Actually, a lot of people.
Demand for gold was already on the rise as people have 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 last 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. And now even Costco sells gold bars.
Ironically, gold hit a record high on Tuesday, the same day Menendez was convicted. That’s because of US investors’ renewed confidence in the prospect of interest rate cuts this year, which also helped the Dow and S&P 500 notch new record highs.
The two kilograms and 11 ounces worth of gold bars Menendez and his wife possessed would have been worth over $185,000 as of Tuesday, according to Goldprice.org data.
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.
