Gold isn’t really an investment. You buy a pound of gold and hang on to it for ten years, all you have is the same pound of gold you started with. It’s not like it was breeding little gold nuggets.
The only way gold increases in value is relative. The value of your gold increases if the value of other things decrease. So gold’s a good investment if you think the general economy is going to decline. Otherwise, stick with the stock market.
Even if you think the economy in general is going to decline you should think twice. In times of economic stress there are great masses of people who believe that ‘this time it’s different’. They are almost always wrong. A diversified plan that hold different assets in proportions you are comfortable with is the only reasonable solution. Your gut or instinct or whatever is unlikely to do well for you over time.
But you could say exactly the same thing about an acre of land, or a Monet. An “investment” isn’t only something that pays interest or dividends.
But Scripture instructs us that a love of Monet is the root of all evil.
Asteroid mining, I sez.
Land is useful. You can grow crops on that land of yours, or build a useful building on it. Or, if you don’t feel like doing the work yourself, you can rent it out to someone else who will do those things, and get money out of it that way. A Monet painting isn’t quite as practical, but you can still get value out of it by looking at it and enjoying it, or maybe charging admission for others to see it. Gold, though, just gets you some lumps of metal that are almost as shiney as brass.
Don’t misunderstand - I’m not saying that gold is a good investment. Frankly, I think it’s a lousy investment. I’m just saying that the definition of “investment” is not simple. It’s anything that might increase in value over time. A “good” investment would be something with a decent track record. A “bad” investment would be something with a lousy track record, or no track record at all.
Flash to the Monty Python sketch, The Idiot in Society:
Bank manager: “He takes bits of string, wood, dead budgerigars, sparrows, anything, but it does make the cashier’s job very difficult; but of course they’re fools to themselves because the rate of interest over ten years on a piece of moss or a dead vole is almost negligible.”
But it’s inspired some good songs…
Gold gold gold gold gold gold gold gold gold!
So all these companies that are making rings and jewelry, what’s that all about?
ITT: the dwarves of Diskworld.
According to Peter Schiff and others, the twin deficits are actually enough.