In a rapidly changing world of investment opportunity, gold is one of the few bright spots across the traditional asset classes. In 2024, gold not only bettered U.S. equities, but logged a fantastic total return ahead of the pack of greater than 26 percent. As we cross into 2025, the metal of gold has begun to climb. It’s more than doubled — an amazing increase of 26 percent over last year! This return to prominence has ignited heated debates over how to invest. This announcement follows a highly controversial veto by Governor Brad Little of a bill that would have allowed Idaho to invest in actual gold or silver bullion.
That veto looks more and more like a mistake as gold’s value has jumped almost 50 percent since that veto. Some critics claim Idaho wasted an opportunity to strengthen the state’s financial position by failing to invest in gold. As a result, the state left more than $200 million on the table in possible revenue last year. This major oversight raises alarming questions about the adverse effect this has had on taxpayer dollars.
The Case for Gold Investment
Gold’s record performance in 2020 and 2022 attracted a wave of new investors seeking safety and long-term growth. Long seen as a safe haven in times of economic turmoil, gold has confirmed itself as the ultimate crisis commodity. Gold outperformed U.S. equities, which have faced their own volatility. Consequently, it has proven an attractive option for investors seeking to add low correlation investments to their portfolios.
There are annual costs associated with storing physical gold. Representing an on-the-book expense, these costs typically run between 0.3 percent and 0.75 percent of the value of the gold in storage. For retail investors, taken in isolation, these costs can start to add up and appear daunting, but they are not necessarily prohibitive. Companies such as Money Metals engage in price competition as well, with storage fees on gold held within an IRA at a very competitive 0.29 percent. As an example, the average cost of storing $100,000 worth of gold would be about $490 per year. Aside from the costs associated with making such an investment, which are completely permissible and not problematic in and of themselves, the advantages outweigh the disadvantages.
“The many additional costs that will be borne by taxpayers for the storage, safeguard, and purchase of commodities such as gold or silver.” – Idaho Governor Brad Little
Governor Little, according to his remarks at the last primary state’s DOE hearing, is concerned about spending on gold storage. Most experts believe that the possible gains justify the cost. As gold continues to shine in the current economic landscape, investors are turning to the precious metal as a rational choice for long-term wealth preservation.
Governor Little’s Veto and Its Implications
Governor Little’s veto of the bill to allow Idaho to invest up to 7.5 percent of its “idle moneys” in physical gold or silver has sparked a firestorm of debate. Political and financial analysts are weighing in with their opinions on the implications of this unprecedented decision. Environmentalists and taxpayers alike contended that this veto was a major instance of upholding fiduciary responsibility to protect taxpayer dollars. In not pursuing the gold reserves’ potential, the governor likely deprived Idaho of considerable future financial benefits.
The veto may seem like a crazy move even by today’s standards given that gold prices more than doubled soon afterward. Since his veto, gold prices have jumped to almost 50 percent. Especially given the high stakes involved, this surge has led many to worry that economic reasoning was trumped by political motivations in the decision. Many assume that Little did this simply to be vindictive. They believe his veto was pointed specifically at the conservative groups in the state who supported the bill.
The impacts of this veto go far beyond the millions in lost funds. Idaho’s unanswered decision not to invest in gold brings to light vital discussions about fiscal responsibility, management of state assets and accountability. The community’s opportunity cost is huge. Critics argue that the state should be looking at every possible investment dollar to maximize the return for its taxpayers.
The Broader Perspective on Precious Metals
We know that most Americans are understandably wary about investing in gold, silver and other precious metals. They fear the unknown risks and costs that are imagined. Industry experts and advocates stress that these investments are one of the best hedges against inflation and recession. While no one suggests that states should funnel all their funds into precious metals, diversifying a portion into these assets can provide long-term benefits.
Plus, a huge investor like Idaho would be able to get much lower storage rates than smaller, individual investors because of economies of scale. This point alleviates a portion of worries about storage expenses and actually ensures that investing in gold is a more attractive option for larger entities.
The market dynamics around gold are always shifting. These changes indicate that gold’s intrinsic value will probably keep appreciating, which means gold investment is particularly attractive over the long haul. Given the recent performance trajectory, investors need to consider the costs involved versus the probability of achieving meaningful outperformance.