# Gold As an Investment. **URL:** \ **Category:** Great Debates\ **Created:** [April 10, 2013, 11:12am UTC](https://boards.straightdope.com/t/gold-as-an-investment/655312 "2013-04-10T11:12:39Z")\ **Posts on this page:** 5\ **Page:** 5
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [April 24, 2013, 5:07pm UTC](https://boards.straightdope.com/t/gold-as-an-investment/655312/81 "2013-04-24T17:07:08Z")
Since I have a fresh batch of popcorn, let’s see if I can generate some entertainment (I’m kidding of course) I googled ‘asset vs investment’ just to see what I got and one of the top hits was [this Forbes article](http://www.forbes.com/sites/kathryntully/2012/10/05/is-art-an-asset-or-an-investment/). It’s talking about art and whether it’s just an asset or also an investment. I think the analogy to gold has been made a few times so it’s apropos. A lot of the article doesn’t really apply to gold since the price probably isn’t quite as fickle, but it should give both sides some ammo - even though it seems to come down pretty firmly on the ‘asset’ side. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [April 24, 2013, 6:44pm UTC](https://boards.straightdope.com/t/gold-as-an-investment/655312/82 "2013-04-24T18:44:55Z")
> [@Measure\_for\_Measure](#): > > We discussed this in Nov 2009: my take is in post 46-47. Apologies. I thought you were making a “this post is my cite” argument, but I read through that thread and found that you did have actual cites in your post there. ---
**Author:** ![Chief\_Pedant](https://avatars.discourse-cdn.com/v4/letter/c/a6a055/32.png) [@Chief\_Pedant](https://boards.straightdope.com/u/Chief_Pedant)\ **Post date:** [April 26, 2013, 12:29pm UTC](https://boards.straightdope.com/t/gold-as-an-investment/655312/83 "2013-04-26T12:29:24Z")
> [@deltasigma](#): > > Since I have a fresh batch of popcorn, let’s see if I can generate some entertainment (I’m kidding of course) > > I googled ‘asset vs investment’ just to see what I got and one of the top hits was [this Forbes article](http://www.forbes.com/sites/kathryntully/2012/10/05/is-art-an-asset-or-an-investment/). It’s talking about art and whether it’s just an asset or also an investment. I think the analogy to gold has been made a few times so it’s apropos. > > A lot of the article doesn’t really apply to gold since the price probably isn’t quite as fickle, but it should give both sides some ammo - even though it seems to come down pretty firmly on the ‘asset’ side. “Asset vs investment” is a nitpicking dichotomy created (in the case of the Forbes article) to make a point that art is frequently overvalued when bought and is therefore, when purchased for the sake of increasing wealth, often performs poorly as an investment. If you can be absolutely certain something will diminish in value, it’s kind of silly to use the term “investment” since we normally reserve that word to connote an increase in value. For this reason, my new Nissan Altima is an asset and not a financial investment. But this is still a very artificial distinction. I may buy a car as an investment, and many people do so, especially with classic cars. Gold is perceived as a legitimate investment by most people buying it. The default expectation is that it will rise in value and it is bought for that reason. The problem with art is that it does not have the standardization gold has. My kid’s art school sketch is probably not much of an investment, but (in retrospect) Picasso’s would have been. The Forbes author is simply making the point that most artwork does not appreciate significantly for the average owner. Gold may turn out to be a horrible investment. It may turn out to be fantastic. The time period chosen for purchase and sale will figure into that equation. I’d say those things are true of almost every investment. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [April 27, 2013, 5:05am UTC](https://boards.straightdope.com/t/gold-as-an-investment/655312/84 "2013-04-27T05:05:40Z")
Ok, here’s post 46-7 from the older thread: > [@Is there a GQ response to the right wing marketing of gold?](https://boards.straightdope.com/t/is-there-a-gq-response-to-the-right-wing-marketing-of-gold/517433/46): > > In all fairness, there’s an older distinction between investment and speculation, mentioned in Graham and Dodd among other places. Currently, I see the nomenclature “Speculative investment” every now and then. > > “Gambling” consists of very high frequency trading where the expected return is negative, largely due to high transactions costs (in the form of a house take). In contrast investments typically have a positive expected rate of return (though they may have a negative inflation adjusted rate of return). That’s my take anyway. > > “Speculation”: [Answers - The Most Trusted Place for Answering Life's Questions](http://www.answers.com/topic/speculation) > There are many definitions. I think **Chronos** was getting at the, “…practice of engaging in business in order to make quick profits from fluctuations in prices, as opposed to the practice of investing in a productive enterprise in order to share in its earnings.” > > Incidentally, many finance textbooks don’t mention gold in their indexes. One that did (Sharpe, et al) devoted but a third of a page to it in the Appendix to the last chapter in the book. They quoted a 1984 study that said that gold amounted to over 6% of the world market wealth portfolio. I suspect much of that was in India and wonder whether they included central bank holdings in the estimate. > > FWIW, I think gold can be speculation, consumption or investment depending upon the reasons for purchase. But if the buyer is unclear on the concepts of correlation, diversification or beta, methinks that they are not engaging in investment but rather something else. > [@Chronos](#): > > So the only difference between a lottery ticket and gold is that lotto tickets have a higher brokerage fee? > [@Is there a GQ response to the right wing marketing of gold?](https://boards.straightdope.com/t/is-there-a-gq-response-to-the-right-wing-marketing-of-gold/517433/47): > > Gold may be volatile, but I would expect it to at least keep up with inflation over the long run. So it’s a little different than horse racing. > > **Contrast with this type of stock trading** > Those who engage in day trading based upon a 2-3 day seminar on the subject are probably just gambling, since the brokerage fees should exceed one’s expected returns, absent a systematic (and back-tested) strategy. If done rigorously though, it can arguably rise to the level of speculation, speculative investment or risk arbitrage. Professional trading desks engage in the latter. ETA Cite: Graham and Dodd: [Security Analysis (book) - Wikipedia](https://en.wikipedia.org/wiki/Security_Analysis_%28book%29) ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [April 27, 2013, 1:11pm UTC](https://boards.straightdope.com/t/gold-as-an-investment/655312/85 "2013-04-27T13:11:16Z")
> [@iamthewalrus\_3](#): > > Yeah, and every reputable definition I can find includes speculating on the future value of something in the category of investment. In addition to the classical difference between investment and speculation cited by **Measure for Measure** , where gold clearly falls on the speculation side of the divide, there is also the economic definition of investment. In macroeconomics, “investment” is considered the production of [new investment goods](http://en.wikipedia.org/wiki/Investment#In_economics_or_macroeconomics). Buying gold is just an exchange of already existing assets, and thus doesn’t count as investment. Likewise, buying an already-existing stock also does not count as investment. This definition is technical, and not commonly used in everyday conversation, but it should still be sufficiently reputable. It’s the one used for calculating GDP. That said, I have no huge objection when people refer to gold as an investment. The meaning is clear. [Previous page](https://boards.straightdope.com/t/gold-as-an-investment/655312.md?page=4)