Thinking About Investing in Gold? Think Again, Ep #41

Should you consider gold as an investment? In this episode of Retirement Made Easy, I address having gold as part of your portfolio. I'll share facts, figures, and why I think gold should NOT be part of a long-term investment portfolio. I would actually exclude it if at all possible. Why? Find out in this episode! You will want to hear this episode if you are interested in... [2:50] Gold is simply a commodity [5:05] Is gold a hedge against inflation? [8:15] Gold versus the S&P 500 [10:45] Commodities are taxed differently [13:35] Better investments than gold Gold is a commodity Buying gold is buying an object. Beanie Babies were a commodity when I was growing up. People thought they could buy them at a low price and sell them for 10x what they paid. They thought they'd get rich quick. People treat gold the same way. They think gold will double in price and they'll get rich. But the only way you can make money is if the price per ounce rises. Let's say Gold is at $1,700 an ounce right now, if it doubled, you could sell it for $3,400 an ounce. Additionally, gold doesn't pay a dividend. It's not paying you any interest while you hold it. You can't make money off of it unless you sell it. Is gold a hedge against inflation? Many people think that gold brings stability to your portfolio or that it's a hedge against inflation. But what does the past tell us about gold? An ounce of gold was $850 in 1980. Today, that same ounce of gold sells for $1,700—so it doubled in 40 years. But what is the annual rate of return? 1.75% over 40 years. That's not very good.  According to OfficialData.org, In the last 40 years, the annual average rate of inflation was 3.21%. The gold you were holding was not a hedge against inflation. You lost money. If the cost of living went up, you need your investment portfolio to be matching that increase. Gold doesn't cut it.  Gold versus the S&P 500 What did go up more than 3.21% annually over the last 40 years? The S&P 500 averaged a return of 11.83% per year. That's over 10% more per year than gold (at 1.75%). The S&P 500 represents almost 800% of the US stock market. If you had invested $100 in the S&P 500 in January 1980, it would be worth $9,788. Your $100 invested in gold would only be worth $200 now. The S&P 500 or mutual funds also pay dividends. Gold pays nothing.  A rental property brings in income as long as you have tenants paying you monthly. Gold won't reward you for holding it. It's like buying real estate that you can't rent out. You make money in real estate when you buy—if you buy at a good value. You only make money when you sell it at a higher price. Unless you buy gold at a low price per ounce, you may not be able to sell it and make a profit. Gold makes beautiful jewelry, but it's not an investment. What are some other huge negatives of buying hold? What would be a far better investment? Listen to the whole episode to learn more! Resources & People Mentioned Official Data Macro Trends Connect With Gregg Gonzalez Email at: [email protected]  Podcast: https://RetirementMadeEasyPodcast.com Website: https://StLouisFinancialAdvisor.com Follow Gregg on LinkedIn Follow Gregg on Facebook Follow Gregg on YouTube Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts