Gold a bad investment? Rebuttal

[erin moore]

"Gold Investments
Dave gives some facts and examples as to why gold is such a bad, long-term investment.

QUESTION: A listener says a lot of people are asking about gold investments. Is this a good idea?

ANSWER: It’s a bad idea to invest in gold. Everyone’s talking about it right now because gold is really high.

In the book, Stocks for the Long Run, Jeremy Segall has a graph that shows what would have happened to a single dollar invested in gold, bonds and stocks since 1801.

One dollar invested in bonds in 1801 would yield $13,975 today.
One dollar invested in stocks in 1801 would be worth $8.8 million today.
One dollar invested in gold in 1801 would be worth $14 today."

This argument has been posed to me. Can you give your best response please?

EDIT: I am very close to making our first real gold investment. Very nervous about the prices and just looking at all sides. (Read: convince me to buy the gold

 

[JaylieWoW]

This may sound dumb, and I'm asking rather than proposing it as a rebuttal... but who do you know that lives for 200 years to see the fruits of an "investment" like that?

Besides, as is said time and time again, if you want to invest in gold you should invest in the mining company stocks. If you simply want a safe way to protect the VALUE or PURCHASING POWER of your money you buy physical gold.

I'm a newbie though and there will be a wonderful flood of more intelligent and far more knowledgeable responses following mine.

 

[Alawn]

That's a stupid argument to use 1801. The price of gold didn't start to go up until we went off the gold standard.

 

[blakjak]

You bring up a good point. The answer is two-sided.

Even Ron Paul has admitted that gold should not be used as an "investment". He has suggested gold and metal mining companies are investments; gold itself is not. However, there are times when you should move your money into hard assets such as gold. What this gives you is protection from a weak or falling currency (today's situation), but as a long-term investment - certainly not.

 

[Danke]

"Gold Investments
Dave gives some facts and examples as to why gold is such a bad, long-term investment.

QUESTION: A listener says a lot of people are asking about gold investments. Is this a good idea?

ANSWER: It’s a bad idea to invest in gold. Everyone’s talking about it right now because gold is really high.

In the book, Stocks for the Long Run, Jeremy Segall has a graph that shows what would have happened to a single dollar invested in gold, bonds and stocks since 1801.

One dollar invested in bonds in 1801 would yield $13,975 today.
One dollar invested in stocks in 1801 would be worth $8.8 million today.
One dollar invested in gold in 1801 would be worth $14 today."

This argument has been posed to me. Can you give your best response please?

EDIT: I am very close to making our first real gold investment. Very nervous about the prices and just looking at all sides. (Read: convince me to buy the gold

?? Which stocks? Which Bonds?

 

[eric_cartman]

"Gold Investments
Dave gives some facts and examples as to why gold is such a bad, long-term investment.

QUESTION: A listener says a lot of people are asking about gold investments. Is this a good idea?

ANSWER: It’s a bad idea to invest in gold. Everyone’s talking about it right now because gold is really high.

In the book, Stocks for the Long Run, Jeremy Segall has a graph that shows what would have happened to a single dollar invested in gold, bonds and stocks since 1801.

One dollar invested in bonds in 1801 would yield $13,975 today.
One dollar invested in stocks in 1801 would be worth $8.8 million today.
One dollar invested in gold in 1801 would be worth $14 today."

This argument has been posed to me. Can you give your best response please?

EDIT: I am very close to making our first real gold investment. Very nervous about the prices and just looking at all sides. (Read: convince me to buy the gold

that's all complete nonsense. first of all... a $20 gold piece from before 1933 is now worth over $1000 (the gold content is only worth i guess about $800ish right now)... so if we say that a $20 gold piece is worth $800 right now, that would mean that $1 worth of gold is worth $40 right now. so i have no idea where this $14 number comes from.

but it is also not fair to compare gold to stocks. gold is not a stock... it doesn't produce anything... it just sits there being gold. the true comparison is to compare gold to it's alternative, which is paper money. gold is a currency, not an "investment". and an ounce of gold a hundred or two hundred years ago would buy you the same type of thing it would today.

and at the peak of the DOW bubble in 1929, the DOW was worth about 20 ounces of gold... now the DOW is worth maybe 11... so you still haven't recovered from the crash in terms of gold if you held stocks from then until now.

but no one is claiming that gold will out perform stocks over the long run. gold just sits there doing nothing, whereas stocks actually produce things and grow. but during certain time periods, gold is a great investment. during the 1970's, gold went from $35 an ounce to over $800. so it was a good investment then. gold was good to hold during the wall st. crash of 1929 and the great depression... and gold will be good to hold now. but eventually, you will have to sell your gold and buy stocks when they become cheap enough.

but again, the real comparison is gold vs. paper money, and gold always wins hands down.

 

[RonPaulVolunteer]

Wait, its not a good investment, but it is a good way to maintain the value of your assets. That's why we are buying gold, not to make money.

 

[eric_cartman]

but go ahead... be my guest... put your money in the stock market. i'll put my money into gold, and we'll see who comes out ahead over the next 5 years. i think gold relative to stocks will go up about 10 fold... at which time, you can take your gold and buy up cheap stocks, or houses, or whatever it is you want to own.

 

[brandon]

Gold really shouldn't be looked at as an investment. The value of gold relative to other commodities has remained pretty stable throughout history. Gold may be worth $10000/oz in a few years, but that will be because the $ lost it's value, not because gold gained value.

You should look at gold as a store of value. Not a wealth generating investment.

 

[BarryDonegan]

being gold itself cannot be viewed as an investment. investing is supposed to be putting capital acquired by savings into a commercial venture in exchange for future profits.