{"id":8773,"date":"2020-08-05T16:36:40","date_gmt":"2020-08-05T16:36:40","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8773"},"modified":"2022-02-26T13:06:33","modified_gmt":"2022-02-26T13:06:33","slug":"is-gold-a-smart-investment-right-now","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/is-gold-a-smart-investment-right-now\/","title":{"rendered":"Is Gold a Smart Investment Right Now?"},"content":{"rendered":"\n

Patricia T. from Fairfax,\nVA asks: <\/em>Hello Mitch, my question today is about gold. I\u2019ve seen reports\nabout gold performing well especially during a crisis, or when inflation may be\ncoming. Seems to me like it\u2019s checking all the boxes! What are your thoughts on\ngold as an investment?<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thanks for writing, Patricia. First, a little bit of\nbackground for other readers. Gold prices have indeed climbed to a new closing\nrecord for the first time in almost ten years, extending a summer rally\narguably fueled by somewhat nervous investors. The precious metal is up over\n20% for the year, attracting the attention of investors across the spectrum.1<\/sup>\n<\/p>\n\n\n\n

The enthusiasm for gold seems to be driven by investors\nbuilding portfolio hedges in light of a gloomy global economic growth outlook,\ndepressed interest rates, and rising tensions between the U.S. and China. In\nterms of your comment about \u2018checking all the boxes,\u2019 the above list of\nconcerns is certainly all in play today. Many investors are also flocking to\ngold because they think inflation is near, or that the U.S. dollar is doomed.\nNeither outcome seems likely to me in the near to medium-term. <\/p>\n\n\n\n

Personally, I have never been a fan of gold as an\ninvestment. When gold became available to U.S. investors to buy and trade as an\ninvestment commodity, it has delivered a nearly +900% return.2<\/sup> If\nthat sounds like a solid return, think again: stocks and even U.S. Treasuries\nvastly outperformed gold over that time period. <\/p>\n\n\n\n

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Even just considering the last ten years, stocks as measured\nby the S&P 500 (red line) have zoomed far beyond the total returns\ndelivered by gold (blue line), even when taking into account the -34% decline\nassociated with the pandemic: <\/p>\n\n\n\n

\"\"
Source: Federal Reserve Bank of St. Louis4<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n

Not only have stocks and bonds outperformed gold over the\nlong-term, they have also exhibited lower volatility than gold over time. To\nme, if stocks as a risk asset have consistently delivered better long-term\nreturns with lower volatility profile, the choice between stocks and gold is a\nno brainer. <\/p>\n\n\n\n

At the end of the day, many people flock to gold because\nit\u2019s a real, hard asset. Something you can feel, touch. Corporations do not\nhave the same qualities. But at the same time, gold\u2019s value as an asset only\nappreciates based on speculative demand. Gold doesn\u2019t make anything, it doesn\u2019t\ngrow, it doesn\u2019t generate a profit. Companies, on the other hand, can grow,\ninnovate, hire new people, grow more, and generate a steady stream of earnings\nover time. In my view, that\u2019s why they appreciate more over time, and are\nultimately a better long-term investment.  <\/p>\n\n\n\n

In the current climate, uncertainty can leave\nmany investors, especially those nearing or in retirement, fearful of what\u2019s to\ncome. This can cause investors to look to commodities like gold to hedge\nagainst risks. A better solution may require pivoting your retirement investing\nstrategy. <\/p>\n\n\n\n

To help you do this, it\u2019s important to understand\nhow recessions work, how long they last, and how to potentially protect\nyourself and your family from long-term damage to your assets<\/strong>. We can help\nyou with our free guide – The Economy is in Recession: 5 Insights to\nNavigate Your Way Through It.5<\/sup><\/em>
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\nIf you have $500,000 or more to invest, get our\nfree guide today. You\u2019ll learn the most scope and impact of recessions, and get\nour viewpoint on the most important moves you can make to weather this one.\nDon\u2019t wait\u2014get this guide today.<\/p>\n","protected":false},"excerpt":{"rendered":"

The popularity of gold rises in troubled times, but a closer looks takes away some of its luster<\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-8773","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8773","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8773"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8773\/revisions"}],"predecessor-version":[{"id":10566,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8773\/revisions\/10566"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}