Should I Buy Gold?

Gold prices have fallen in recent times. A few friends were recently was in touch asking whether should they look into buying gold?

gold-bars

Gold basically has value but doesn’t generate returns unlike stocks (businesses) or properties. Asian countries like India & China do have a love affair with gold although this has been tapering off somewhat of late as well.

Some also view gold as a hedge against the USD or inflation. This view is mixed though & searching online you can find both sides of the argument towards making your own conclusion.

Read more: Gold: Not much of a hedge for anything (forbes.com)

A Summary on gold:

  • Speculative investment with long periods of stagnancy.
  • Still commonly viewed as a buffer against downturns.
  • Most significant con being gold does not generate returns unlike businesses, shares & properties.
  • The amount of gold used for both decorative & industrial purposes is small compared to total output.
  • Requires willing party to buy at higher price to realize any gains

In my opinion, you can consider buying gold as a form of savings (or anti-currency) but not as an investment. Suggested to keep 0 to max 5% of portfolio.

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