A full-page ad for gold coins is often featured in The National Post these days with the headline “GOLD BLASTS PAST $644/oz! BUY NOW – EXPERTS NOW PREDICT $2,000 – $3,000 per oz”. It is quite true that gold has been on a tear recently reaching multi-decade highs. However, gold is a very poor investment: it costs a lot to buy and sell, it costs money to store, it pays no interest or dividends and over the long-term, it keeps pace with inflation and offers no growth. While gold does offer some diversification benefits as it has negative correlation with other asset classes, it is still a poor bet for most long-term investors.
Buy Gold! Buy Gold!
- May 14, 2006 at 8:55 pm
- by Ram Balakrishnan
- Tweet Share Share
This article has 7 comments
Recommended Posts
High Interest Savings Accounts at Discount Brokers
High Interest Savings Accounts Best Rate Around HIGHINTERESTSAVINGSACCOUNT.CA [Note: This post is being updated as of November, 15, 2017 to note a couple of recent… Read More ›
A Foolproof Method to Convert Canadian Dollars into US Dollars
The traditional Norbert Gambit takes advantage of inter-listed Canadian stocks (RIM on the TSX and RIMM on NASDAQ, for example) but many investors find that… Read More ›
Scotia iTrade Review
When Scotiabank acquired the Canadian brokerage arm of E*Trade, the account I had opened with E*Trade to my participate in my employer’s Stock Purchase Plan… Read More ›
Manulife IncomePlus: The high cost of peace of mind
Manulife IncomePlus is a Guaranteed Minimum Withdrawal Benefit (GMWB) type of variable annuity product aimed at people who are about to retire or in their… Read More ›
Beware of tax shelter donation arrangements
Recently a friend asked about a “tax scheme” that claims to buy medicines for AIDS patients (“Fight AIDS Save Taxes” is its slogan) in Africa… Read More ›
Try telling that to all the gold bugs out there!
what about gold stocks like AUR? are they a good bet still?
To quote tech-stock gurus from 2000, “But this time it’s different!”
Jonathan: Gold bugs belong to a cult, so chances are I would be the one who is converted 🙂
Harry: I know very little about gold stocks and don’t know anything about AUR. But, it is definitely better to buy the companies that dig out the stuff and sell it than buying the stuff itself. Just my opinion.
Tom: That’s got to be most expensive words in history. I’ll bet the Dutch were saying the same thing when buying tulips.
like everything else, there’s a time to buy and a time to sell. Like i said on my blog, the time to buy was when it was under $550[and i did]. now isn’t the time to buy and pretty soon it’ll be time to sell, much to my financial benefit!
Only time will tell and timing is everything … gold will continue to outperform most stock market this decade – jmo.
ES, Tony: The long-term record for gold is clear. Ignoring holding costs, it keeps pace with inflation. Better than T-bills, but worse than long bonds and much worse than equities. I believe that short-term fluctuations of any asset class is unpredictable and most people shoudn’t even play that game.