People love to debate, but sadly sometimes it crosses a line and turns argumentative. That’s what is happening right now with the debate over gold.
To have any intelligent understanding of your own position, you need to welcome debate. That way you can challenge your own opinions and, if you find they’re correct, improve your arguments too. Such as whether gold investing continues to warrant attention.
We’d like to look here at some of the common arguments now offered for why gold should not figure in your investment strategy:
#1. Gold Does Not Yield Anything
Gold ownership yields security for the investor, the type of security a person seeks from insurance. It is the only physical form of insurance which both exists to counterweight your investments in bonds and stocks, and which is also a liquid, easily traded asset.
So the goal for most investors in holding gold is first as a safety net for their other assets. This metal has held value for thousands of years, and will hold value for thousands more.
#2. Gold Is Worth Only What the Next Investor Will Pay for It
There are no stocks, bonds, commodities or goods that are worth more than the next person will pay. That being said gold has something that the others do not. Gold is 100% transparent, in that, unlike other easily traded investments it is only one thing, a pure and precious rare commodity which requires little space for storing great value.
#3. Gold Is Not a Good Hedge for Stocks, Nor Inflation
You can lose value owning gold if you buy high and sell lower, but you never lose it all. All assets including gold have to be looked upon as part of a strategy for the investor and not as independent pieces of life’s asset management puzzle.
#4. Gold is an Article of Faith, Not Rational Investing
There are certainly those that invest on faith, and they can be loud, giving the impression that investors in gold are extreme. But this can also be said about the defense of the US Dollar. That currency in the end is only a piece of paper that has no other use than that ascribed by the government. If you put fire to a dollar bill it will turn to ashes and float away. But if you put fire to gold, at the right temperature you get a liquid metal that not only is useful to the arts but important in the electronics and high technology industries.
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