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Social Credit Score? How About a Hard Money Credit Score!

Jeff Clark, Senior Analyst, 
MAY 12, 2022

You’ve likely heard about the idea of a social credit score, where citizens could be graded on how environmentally or socially responsible they are. You recycle? Score one. You don’t recycle, minus one. You drive an electric vehicle? Score ten. You drive a carbon-spewing SUV, minus ten.

We can debate how effective something like this would be, and the scary ways it could be abused by the government, but in my view there’s a more important scoring system that should be implemented.

It has direct bearing on your financial future…

The Hard Money Credit Score Test

Why a hard money credit score? Because your views and actions around money impacts everything else in your life.

Not only is your financial future dependent on it, so is your country. And not just in the near-term, but your heirs will eventually be impacted by your hard money credit score. As will the health and vibrancy of the nation you call home.

Here’s the quiz to determine your Hard Money Credit Score. Answer each question honestly, then tally your responses at the end to calculate your score.

Category One: How Important is Freedom?

1. At Tiananmen Square in 1989, Tank Man was:
     a. A criminal
     b. A hero
     c. An elite tank operator

2. Individual liberty should be:
     a. Greater than government power
     b. Less than government power
     c. The same as government power
     d. The name of my next dog

3. For his “Audit the Fed” bill, U.S. Senator Rand Paul should be:
     a. Banned from social media
     b. Imprisoned
     c. Championed
     d. Made to work at the Fed to see how difficult it is to manage the economy

4. Which word/phrase best describes the ideal president to you?
     a. Leader
     b. Ruler
     c. Community organizer
     d. Foghorn Leghorn

Category Two: What is Money?

5. The dollar bill in your wallet is “money” because:
     a. Duh, I can buy stuff with it!
     b. Nothing better than cold, hard cash
     c. It does not meet the definition of money

6. A fiat currency cannot be “money” because:
     a. It does not hold value over the long term
     b. It IS money because the government controls the monetary system
     c. It’s too easy to counterfeit currency notes

7. What is the reason all fiat currencies have historically become worthless?
     a. Governments eventually create too many currency units
     b. Lack of government power to control spending by its citizens
     c. Politicians don’t know how to pronounce fiat

8. What is the most accurate definition of inflation?
     a. A rise in consumer prices
     b. An expansion of the currency supply
     c. The process of a balloon getting bigger

Category Three: How Valuable is Gold?

9. What is the primary reason most central banks hold gold in their Reserves?
     a. Tradition
     b. To protect their currency or economy against collapse
     c. To please Chrysus, the Greek God of Gold

10. Which portfolio has performed best over the past 20 years? One with…
     a. Zero gold
     b. 5% gold
     c. 10% gold

11. Physical gold provides the ordinary citizen:
     a. A hedge against crisis, including stock market collapse and recession
     b. A store of value
     c. A tangible asset with no counterparty risk
     d. All of the above
     e. Gold is not necessary to own, the government will always support the economy

12. What is the most secure place to store gold?
     a. A home safe
     b. A safe deposit box at the bank
     c. Private, non-bank storage

Calculate Your Hard Money Credit Score

Let’s see how you did…

Question #1: At Tiananmen Square in 1989, Tank Man was:

b) A hero. At the core of freedom is the right to protest. It is believed that Tank Man was executed for his behavior, an abhorrent act that violates human freedom at its very core. The less freedom one has, the less control they have over their financial future.

Question #2: Individual liberty should be:

a) Greater than government power. The Bill of Rights all center around the rights that individuals have over government—not the other way around. Only with individual liberty can economies flourish, including one’s standard of living.

Question #3: For his “Audit the Fed” bill, U.S. Senator Rand Paul should be:

c) Championed. Another tenant of freedom is transparency. That the Federal Reserve—which runs our monetary system—cannot be fully audited is in direct contrast to freedom. One doesn’t have to like Mr. Paul, but the government should ultimately be accountable to the people. If not, it can more easily hide important facts from the people.

Question #4: Which word best describes the ideal president to you?

a) Leader. A “ruler” makes laws without representation, while a leader implies a partnership between government and its citizens. Rulers look out for their interests, not yours.

Question #5: The dollar bill in my wallet is money because:

c) It does not meet the definition of money. Socrates laid down the five functions of “money” centuries ago. Dollars fail to meet the criteria of a “store of value.” If one tries to use dollars as a store of value they will eventually lose purchasing power—and the longer it goes on the more buying power that’s lost.

Question #6: Fiat currency is not money because:

a) It’s not a long-term store of value. All fiat currencies lose value over time, as chart #1 in this article shows. While one always needs cash, currency units are a very poor long-term savings vehicle.

Question #7: What is the reason all fiat currencies eventually become worthless?

a) Governments create too many currency units. This is the temptation every government leader faces, and history shows they all eventually succumb to it. Which erodes the value of each unit of currency, including every one in your wallet or purse.

Question #8: What is the most accurate definition of inflation?

b) An expansion of the currency supply. This is an important distinction, because when the quantity of currency increases more than economic output, it causes distortions in the economy, misallocations of capital, and financial bubbles. How does one protect against this? Your answer to that question will affect your financial future.

Question #9: What is the primary reason most central banks hold gold in their Reserves?

b) To protect their currency or economy from collapse. As the World Gold Council outlines, gold meets the three basic criteria for a Reserve asset better than anything else: safety, liquidity and return. It can protect your portfolio from currency or economic upheaval, too.

Question #10: Which asset has performed the best over the past 20 years?

c) One with 10% gold. This surprises many investors, but it’s true, and highlights how critical it is to have a meaningful amount of gold in one’s portfolio.

Question #11: Physical gold provides the ordinary citizen:

d) All of the above. As this article shows, you possess all these features and more if you own gold. You’d be hard-pressed to find another asset that comes with all these advantages.

Question #12: What is the most secure place to store gold?

c) Private, non-bank storage. It’s embarrassing to admit but I’ve had gold stolen from my home. And since one function of gold is to protect against the banking system, storing in a bank is not an ideal choice.

Calculate Your Hard Money Credit Score

Based on the number of your correct answers…

9-10: You’re a hard money expert! If you not just know the answers but live them, your finances are well prepared for the kind of financial environment most likely ahead.

6-8: You’re almost there. Read the articles linked in the answers above to see how prepared you really are for risks to your portfolio.

0-5: A low score leaves you vulnerable to all kinds of risks—financial, economic, and monetary. Remember, a lot of these risks are out of your control, and gold is one of the best ways you can shield yourself against them.

Safeguard your financial future with a meaningful amount of physical gold. Your future self will thank you.