I’m not sure I’d go that far, as we must consider all investment vehicles when looking at our portfolios. As we know, asset allocation is something to pay attention to, and it can make a big difference in our investment returns as we work to grow net worth.
That being said, I came across an interesting piece in the WSJ, which talked about how important gold should be in an investor’s portfolio. Or, more accurately, how unimportant it should be.
The idea here seems to be that gold is something that doesn’t necessarily serve as a great hedge vs. inflation, based on data analyzed. This despite this common perception many of us have of gold. Also, gold doesn’t throw off any cash flow. It’s an asset that goes up and down in value, with price appreciation being your money making opportunity. Overall, the notion is that gold can be volatile, not as much as an ultimate store of value as many people think, and potentially dangerous for a portfolio if it makes up too high of a percentage of it.
We have heard some words before that cast doubt on gold as a prime investment vehicle. Considering the words of Buffett on gold, as we discussed here before, it appears that one of the highest profile investors out there expressed less than enthusiastic commentary on gold versus other options.
I’ve posted before about investment bubbles and touched on the notion of whether or not gold was in one. Additionally, we previously talked about whether or not there was a silver bubble – as it turns out, there was. Metals, since they became en vogue a few years ago, haven’t performed all that well as investment vehicles.
Personally, I’m beginning to think that maybe a very small percentage of one’s portfolio could consist of gold, but really in the spirit of diversification more than anything else. I’m coming around lately to seeing that there is no special reason for a regular, individual investor to hold excessive positions in gold – or silver, for that matter. There are other places where can also park our money and to invest it. Perhaps gold is but one part of a diversified portfolio, if it’s one at all?
My Questions for You
What do you think of gold as an investment today?
Do you agree with the suggestion that gold is not an important or essential part of an investor’s portfolio?
Did you buy or sell any gold during the price run up a few years ago?
The above post was included in the Carnival of Personal Finance at NerdWallet