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!
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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.