AlexR

Is It Time to Buy Gold?

Although gold is a great investment vehicle for storing and preserving purchasing power, price volatility renders the inflation protection so unreliable as to be useless for individual investing time frames. The minimum holding period where gold starts to preserve value reliably is around 50 to 100 years. So unless you're talking about heirloom assets, university endowments, central bank reserves, sovereign wealth funds, etc, inflation protection is not a good reason to own gold. There are other reasons of course: transportability, privacy, asset diversification, ease of storage, etc.

On Dec 05 11:28 AM AlexR wrote:

> Gold has utility as jewelry, tooth fillings, electrodes, and a few
> other places; and this gives it a natural price floor and ceiling:
> at some price point it's a bargain, but if it moves too high there
> is just a lot of other stuff the average person would rather buy
> with that money. This little bit of utility combined with non-perishable
> composition and ease of transportation justifies a certain secondary
> utility: as a means to store value in the very long-term at very
> low cost (inflation protection, no fees and no taxes, wow!). But
> to extrapolate that into some sort of miracle investment that can
> only go up (especially in a recession) is really stretching the facts
> too far.

Is It Time to Buy Gold?

Gold has utility as jewelry, tooth fillings, electrodes, and a few other places; and this gives it a natural price floor and ceiling: at some price point it's a bargain, but if it moves too high there is just a lot of other stuff the average person would rather buy with that money. This little bit of utility combined with non-perishable composition and ease of transportation justifies a certain secondary utility: as a means to store value in the very long-term at very low cost (inflation protection, no fees and no taxes, wow!). But to extrapolate that into some sort of miracle investment that can only go up (especially in a recession) is really stretching the facts too far.