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. 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.
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.
“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.
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. 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.