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A CFP® professional’s thoughts on GOLD

I love gold (and silver).  But not for the reasons many think.  I don’t look on gold as an investment.  What?  For something to be an investment, it must have an expected rate of return.  First, gold doesn’t offer an expected rate of return.  Neither does silver or any other metal.  Neither does oil or timber.  That’s because they don’t produce a service or product for consumer use.  They are just things. Now, granted, they are valuable things, but still, they don’t create anything in and of themselves.

Secondly, investments will produce an income stream better known as dividends. Companies make dividend payments for ownership of their stock.  Gold doesn’t do that.  The only variable that comprises its rate of return is its price.  And that price moves upward and downward on a daily basis.

Finally, gold doesn’t make a good investment because its historical rate of return is quite modest compared to stocks and bonds, while at the same time, it has a tremendous amount of volatility, or risk.  A low return with high volatility is not a good combination.  Take a look at the video below for why it may be a good reason for you to own some gold.

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