What is the attraction of gold as an investment?

[Seattle]

I've never gotten the attraction of gold as an investment. Long term it's been a terrible investment. It's supposed to be an inflation hedge but it's not really been good in that regard. It's a commodity but so is corn.

Sometimes you will hear people say a well diversified portfolio should have 5% to 10% gold...why? Even if it happened to go up when stocks were going down...how is 5% really going to make much difference?

If you just want to have something go up when stocks are going down just buy stocks that pay dividends and then you'll still have dividends while the stock is lower.

I think people just like to look at it.

Any other viewpoints out there? What am I missing?

 

[Jeeves]

Tradition and sentiment. Gold was what people sewed into the hem of their garments to flee from one conflagration or another persecution since written history began. Gold has the feel of solidity, permanence, reliability. It's the symbol of wealth in every fairy tale and proverb of every culture. People kill for it, risk sunstroke, snake-bite, pirates, vengeful pharaohs and frost-bite for it, hoard it, bury it, build great big semi-pregnable vaults over it and gild the pictures of their saints, gods and monarchs with it.
Gold is the icon of success, piety and economic well-being.

 

[Seattle]

Yes, I'm aware of the history but regarding actual investors, I don't get it. It's a terrible investment.

I understand (but don't agree) why some people have a few gold coins in their house just in case of the zombie apocalypse but putting 5% of your assets into a terrible investment...it doesn't compute.

 

[Sarkus]

It's typically a good hedge against a falling stock market... it holds up reasonably well during recessions, although for the best part of the last hundred years it has been nowhere near as good as the equity market. Only for limited periods (i.e. recessions).

 

[Write4U]

Gold is not a native metal of earth. It is produced by extremely large stellar pressures.

Gold does not oxidize. It is a noble metal which does not react to oxygen.

Gold is an excellent electrical conductor.

Gold is easily malleable.

Gold is usable in sterile environment.

Gold is a valuable commodity in medical applications.

 

[Jeeves]

Yes, I'm aware of the history but regarding actual investors, I don't get it. It's a terrible investment.

Actual investors are subject to emotional imperatives, like everyone else. Actual people often make terrible decisions. I stopped trying to "get it" some time ago.

 

[Write4U]

Perhaps, this may be of interest. Gold is a limited resource deposited on earth via stellar bombardment. When we eventually run short on gold, the price will literally skyrocket, because it costs much more to artificially produce it than it's worth from mining.

Can gold be created from other elements?
Category: Physics Published: May 2, 2014

Yes, gold can be created from other elements. But the process requires nuclear reactions, and is so expensive that you currently cannot make money by selling the gold that you create from other elements. ... Every atom containing 79 protons is a gold atom, and all gold atoms behave the same chemically.May 2, 2014

https://wtamu.edu/~cbaird/sq/2014/05/02/can-gold-be-created-from-other-elements/#

 

[billvon]

I've never gotten the attraction of gold as an investment.

Some people get it as an "after the zombie apocalypse" hedge, when all fiat currency is worthless. The presumption is that gold, as a metal with inherent value that has been valued for millennia, will still have value after society collapses.

Of course this doesn't work if you are merely invested in the gold market or in gold futures, which is how most people invest. You have to actually have the metal itself.

 

[Seattle]

Perhaps, this may be of interest. Gold is a limited resource deposited on earth via stellar bombardment. When we eventually run short on gold, the price will literally skyrocket, because it costs much more to artificially produce it than it's worth from mining.

Can gold be created from other elements?
Category: Physics Published: May 2, 2014

https://wtamu.edu/~cbaird/sq/2014/05/02/can-gold-be-created-from-other-elements/#

I think that applies to any of the heavier elements doesn't it? I don't think this has anything to do with gold as an investment however.

 

[Seattle]

Some people get it as an "after the zombie apocalypse" hedge, when all fiat currency is worthless. The presumption is that gold, as a metal with inherent value that has been valued for millennia, will still have value after society collapses.Y

Of course this doesn't work if you are merely invested in the gold market or in gold futures, which is how most people invest. You have to actually have the metal itself.

You also have to have to be pretty bad accessing probabilities.

 

[billvon]

You also have to have to be pretty bad accessing probabilities.

Yes. But as humans we are good at seeing the unusual, so when someone wins the lottery, or makes a million on a (normally) bad investment - those are the ones we remember, and some people take that to mean that those things are actually good investments.

 

[gmilam]

In the case of a zombie apocalypse, I would think a case of Spam or Campbell's Soup would be much more useful than a brick of gold... but what do I know?

 

[Seattle]

In the case of a zombie apocalypse, I would think a case of Spam or Campbell's Soup would be much more useful than a brick of gold... but what do I know?

People have fantasies of being able to get out of a bad situation by bartering with a few gold coins even though road traffic, the power grid going down, lack of food are much higher priorities.

And that is just the nuts. None of that applies to investors who buy a few gold mining stocks just to "diversify" their portfolio. How does putting 5% of your portfolio in gold stocks do anything?

Gold hasn't always even been the hedge against inflation that it's supposed to be. In the U.S. look at a chart of the spot price of gold. You have to start with 1972 (?) when we went off the gold standard and gold was allowed to freely trade.

In order to have made any money you have to (in hindsight) pick specific spots where you would have gotten in and out. Look at real estate or stocks and it's an upward slope with some minor down periods or sideways periods. With gold it's hard to do anything other than lose money.

The gold bugs are always talking gloom and doom but it never arrives and when there are periods when (according to theory) gold should move up, it still oftentimes does not.

If you bought gold at its peak in the early 1980's, now, 40 years later, you would still be losing money.

 

[Write4U]

I think that applies to any of the heavier elements doesn't it? I don't think this has anything to do with gold as an investment however.

I am not speaking of capital investment. Investment in a limited resource is always a bad deal.

I am talking about investment in gold bullion, which has a timeless value, regardless of market conditions.
Gold is not a luxury item. It has specialized high-end scientific uses and is in limited supply.

Gold Nanoparticles: Preparation, Properties, and Applications in ...

Spherical AuNPs possess useful attributes such as size- and shape-related optoelectronic properties,18 large surface-to-volume ratio, excellent biocompatibility, and low toxicity. These properties make AuNPs an important tool in bionanotechnology (Table 1).Nov 10, 2011

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4101904/

1 bar of gold yields an enormous amount of gold nano-particles!

 

[Seattle]

I am not speaking of capital investment. Investment in a limited resource is always a bad deal.

I am talking about investment in gold bullion, which has a timeless value, regardless of market conditions.
Gold is not a luxury item. It has specialized high-end scientific uses and is in limited supply.

Properties of gold nanoparticles

Spherical AuNPs possess useful attributes such as size- and shape-related optoelectronic properties,18 large surface-to-volume ratio, excellent biocompatibility, and low toxicity. These properties make AuNPs an important tool in bionanotechnology (Table 1).Nov 10, 2011


(A) Two-phase synthesis of AuNPs by reduction of HAuCl4 in presence of alkanethiols as the stabilizing ligands and NaBH4 as reducing agent. Place-exchange reaction for alkanethiol-protected AuNPs can then be performed with functionalized thiols. (B) Citrate-stabilized AuNPs were prepared with HAuCl4 solution under reflux conditions where citrate acts as both the stabilizing ligand and reducing agent. The ligand exchange of functionalized thiols for citrate-stabilized AuNPs was achieved by using Tween 20 as an intermediate.


Gold Nanoparticles: Preparation, Properties, and Applications in ...

I know you like to post whatever it is you post regardless of the subject matter but even your first statement makes no sense "investment in a limited resource is always a bad deal"?

The thread wasn't about where gold came from. I think you posted that it didn't come from Earth. Of course it came from Earth. Before Earth was formed it came from a supernova but so did most other heavier elements.

However that has nothing to do with the topic. Regardless as to whether something is useful (most things are) the fact remains that a chart of the price of gold over time shows that it's not a good investment.

If you make jewelry out of gold then of course you need gold. Again, the subject was gold as a good investment which it has proven not to be. It's a store of value perhaps when the world is ending. For some cattle or sheep serve the same purpose.

 

[Write4U]

I think you posted that it didn't come from Earth

Why don't you read the original post? I posited that gold is not native to earth and therefore in a limited supply which cannot be replaced except at extreme cost.
As exchemist observed, capital investment in gold stock is not a winning strategy. Investment in gold bullion is an excellent long term strategy, due to is suitability for specialized nano-scale technology.

 

[Michael 345]

In the case of a zombie apocalypse, I would think a case of Spam or Campbell's Soup would be much more useful than a brick of gold... but what do I know?

Or a pile of brains with which to set zombie traps

 

[Seattle]

Why don't you read the original post? I posited that gold is not native to earth and therefore in a limited supply which cannot be replaced except at extreme cost.
As exchemist observed, capital investment in gold stock is not a winning strategy. Investment in gold bullion is an excellent long term strategy, due to is suitability for specialized nano-scale technology.

Bullion doesn't earn anymore than any other gold. It's a supply issue if you use it in your business.

Everything is "native" to Earth in one sense and in another sense no metal is "native" to Earth. No elemental metals are produced here. All heavier elements were formed before Earth was formed.

 

[Write4U]

Bullion doesn't earn anymore than any other gold. It's a supply issue if you use it in your business.

Who said anything about a business or earning.?

Everything is "native" to Earth in one sense and in another sense no metal is "native" to Earth. No elemental metals are produced here. All heavier elements were formed before Earth was formed.

Let me put it this way.
When it comes to having something of enduring value, I'd rather have a 1600 oz of gold than lead in my safe.

 

[wegs]

Gold doesn’t seem like a great investment especially during crazy unexpected disasters. What’s weird though is what little return many receive on gold as compared to the stock market, yet swear by gold. Lol

What are your thoughts on dogecoin, Seattle?