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Gold Train: All Aboard

I understand the value of holding gold, or other "real assets", as opposed to keeping cash under your mattress, protects you against inflation and resultant currency devaluation. That said, most people hold their dollars in investments (e.g. treasuries or bank CDs) that pay interest rates which typically compensate for this inflation/devaluation plus offering an extra return margin (i.e. TYPICALLY offering real not just nominal returns). Gold, is no sure protection against inflation/currency devaluation. The CPI adjusted gold price for 1979 is c. 2000/once, meaning gold investors have suffered a substantial real loss over the past 29 years. Not, historically, a great/safe investment.

Gold Train: All Aboard

Yes, there is a finite supply of gold, just as there is a finite supply of dirt -- and the intrinsic value is about the same. OK, gold is a bit shinier and prettier, but dirt is actually probably more useful. Buying gold is just like any other ponzi scheme, you hope that someone else will buy it at a higher price, although there is no means to justify that price. Be careful in jumping on this ponzi scheme now, those who bought gold at the end of 1979 had to wait 26 years for the price to come back to where they bought it (and that's in nominal terms -- in real terms, forget about it). Who knows where the price goes from here (probably no one), but I would prefer to buy assets with real intrinsic value. Warren Buffett best summed up gold: "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."