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The article below is a summary of an article by JP Cortez (SoundMoneyDefense.Org), which has been edited and abridged to provide a fast & easy read.
Although the article was written in 2017, the core themes remain largely valid today in 2025. Key issues like pension fund underfunding, dollar devaluation, and inflation have continued or even intensified over the past few years. We have included some updated statistics to reflect more recent data.
To read the full article, please visit Pension Funds Need Gold before It’s Too Late
Millions of Americans and their employers put money into pension plans every month, hoping these funds will grow and be there when they retire. However, there’s a serious problem: many U.S. pension funds are underfunded. This means they don’t have enough money saved to pay for all future retiree benefits.
On top of that, a lot of these funds invest in financial products that may not earn enough to keep up with rising costs and inflation. So, while people expect their pensions to protect their future, many pensions are at risk of not growing enough to cover their promises, creating a financial time bomb.
Introduction to U.S. Pension Plans
American Express launched the first private pension system in 1875, which began transforming retirement benefits for employees. Most employers operated as small businesses, which did not provide pension plans before 1875.
Private pensions became widespread between 1929 and 2011, until they disappeared from 82% of private sector employment. The $21.7 trillion value of pension funds in 2015 faces a high risk of collapse because of insufficient funding and unwise investment decisions.
[Editor’s note: The total U.S. retirement market is approximately $43 trillion as of 2025. While many public pension plans remain underfunded by billions (see Figure 1), U.S. corporate (private-sector) defined benefit plans were, on average, effectively fully funded as of a report from May 2025.]The Inflation Risk Ignored
Pension managers must protect their funds from inflation risks because this threat persists in the present day. The majority of pension managers fail to allocate their funds to assets that defend against the declining value of the dollar.
Physical gold and silver serve as reliable inflation protection assets, yet pension funds do not utilize them enough.
FIGURE 1: US State Pension Funding Status and Ratios (2022)
The Inevitable Dollar Devaluation
Since the Federal Reserve started operations in 1913, the U.S. dollar has lost more than 95% of its purchasing power and experts predict this decline will continue. Pension funds should increase their precious metal holdings because the dollar’s value decrease leads to higher gold prices.
Pension assets contain only 1.8% of commodities, but gold and silver make up a minimal portion of this total. The majority of pension funds allocate their assets to bonds, stocks, and real estate investments.
[Editor’s note: For U.S. public pension plans in 2024, commodities comprise only about 3% of total assets (with gold and silver being a very small portion of that). The majority of pension assets remain invested in equities, fixed income, real estate, and alternative investments.]Why Gold Balances Portfolios
Risk management stands as the essential factor for all investment activities. Government bonds appear secure at first glance, but their value depends on the financial stability of a government burdened by substantial debt.
The government uses inflation to decrease the debt value, which causes bonds and the dollar to lose their worth. The value of gold increases when the dollar depreciates, while it maintains stability during times of crisis.
Many pension fund managers face opposition from brokers and conventional thinking when they consider raising their gold investments to protect against market losses.
Texas Shows How It’s Done
Texas stands out as a leader through its pension fund investments, which now include almost $1 billion worth of physical gold in funds like the Texas Teacher Retirement Fund. The new Texas Bullion Depository will serve as a domestic storage facility for this gold reserve.
[Editor’s note: The University of Texas Investment Management Company (UTIMCO), which oversees university endowments rather than pension funds, purchased nearly $1 billion in physical gold in 2011. That gold was held in a New York vault (HSBC), not in the Texas Bullion Depository at the time. The Teacher Retirement System of Texas (TRS), the state’s largest pension fund, does not hold significant physical gold positions.]
The portfolio manager supports gold as a vital portfolio diversifier because pension funds currently hold mostly stock investments. Pension managers who fail to include gold in their investments create avoidable dangers for their funds and their retirees. The time has come to revise investment strategies by adding substantial physical gold and silver holdings, which protect against inflation and market instabilities.
To read the full article, please visit Pension Funds Need Gold before It’s Too Late
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