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Why Investing in Gold isn't a Good Idea

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Why Investing in Gold isn't a Good Idea – Most Popular?

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Buying gold as an investment — good or bad?

There is a huge portion of financial media that fixates on gold. The most common argument you’ll see is that gold is a hedge for economic collapse – gold is seen as a safe place to store money because it’s been used as a form of currency for thousands of years.

That history, plus gold’s global appeal and limited supply sells a lot of people on the value of gold as an investment. But is it actually a good idea?

As an investor, you’re looking to buy something that will be worth more in the future than it is today. To measure that, a lot of people will look at the “intrinsic value” – or the inherent worth of a company, property, or asset.

Most of this analysis will look at the money the potential investment over time might generate

In the case of a company, you’d look at the expected profits the business would generate over time. As a shareholder, you’re a part owner of the business and so your stock entitles you to a sliver of those earnings. For a business that is growing over time, earnings should go up, and the value of your piece of ownership should follow.

What’s tricky about gold is that as an asset, it doesn’t actually generate cash. The piece of gold you own today will be the same piece of gold 5 years from now, no more and no less.

If you buy a house, you can decide to rent it out, and over time the rental payments you receive could provide a steady flow of cash. Alternatively, you can live in the house and instead of paying rent month after month, you would be making mortgage payments and building equity over time in an asset that is capable of creating cash flows.

On its own, gold can’t generate cash, which makes it harder to value.

The value of gold is really tied to its scarcity – that gives it value in the jewelry market and it makes it useful as a store of value and means of exchange.

Some of you probably heard that and thought “what the heck does that mean?”

Globally, gold is recognized as a precious metal, and that worldwide recognition means it readily can be exchanged across borders and cultures, which is part of the reason why major institutions like central banks maintain gold reserves.

It’s also why some investors want in on gold.

They view it as a hedge against economic instability and inflation. Paper dollars, like the US dollar are “fiat currency” — meaning they have value because we say they have value — sound familiar?

So, if events unfold that lead people to question the value of a fiat currency, OR the government takes actions that change the value of a currency — like printing waaaaay more bills and giving them out to people — the currency can lose value. If a currency loses value, the relative value of gold, as expressed in that currency, will shoot up, allowing investors in gold to profit.

Some people keep money in gold because it is less tied to any one government and isn’t as impacted by inflation or an economic collapse in any one country.

But it’s merit as an investment really depends on the timeline you’re looking at.

From September 2008 to August of 2011, the price of gold went up over 100% while stocks in the US eeked out 1% gains on a total return basis.

There’s money to be made investing in gold, but it comes down to being right about gold at the right time — because gold tends to surge in value when major financial systems are struggling.

Since September of 2011, stocks have returned over 180% on a total return basis while the price of gold has fallen nearly 30% AND the returns of the S&P 500 trounce those of gold on a 1,3,5, and 10 year basis.

And for people with a very long time horizon, since 1990, The S&P 500 has posted 1,400% gains on a total return basis. Over the same nearly 30 year period, gold has returned 220%.

If you are worried about an economic downturn, it may make sense to have a small portion of your portfolio in gold, but it certainly shouldn’t be your main investing strategy, and for many time periods, you’d be better off being all in stocks.

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37 Comments
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37 Comments

  1. J S
    July 18, 2021 at 2:36 am

    You can always sell silver and gold like money over the long term long time after crisises

  2. Emilia J. Hatch
    July 18, 2021 at 2:36 am

    Intellectwebs helps with all hack issues solved he’s trusted and adder up $10,000 to my cashapp account for my financial troubles

  3. Scuba Steve
    July 18, 2021 at 2:36 am

    It isn’t an “investment” it’s an insurance policy against central bank policies and it’s universal money. Doesn’t matter what country you go to or even what planet. Gold is value.

  4. robert stenton
    July 18, 2021 at 2:36 am

    Long term . GOLD .

  5. Compilations For days
    July 18, 2021 at 2:36 am

    This channel name surety fits

  6. Dan D
    July 18, 2021 at 2:36 am

    So he saying basically if you buy gold at a certain price and the price of gold goes way up a few months later then you cant make a profit by selling it at alot higher price than you paid for it. Hmmm well I guess he volunteered to be that guy. The guy that lets the air out of his tires to get better gas mileage. The guy that flies his airplane right into a brick wall thinking thats the best thing to do. The guy who loads a gun cocks it and points it at his face and pulls the trigger because je wants to live a long time. The guy that dumps gasoline all over his car and throws a lit match on it because he loves his car. Ok dude you can be that guy if you want but dont tell the rest of us what to do. You are that guy so thinking up is down and forward is backwards and thinking 2+2=37 is your job. Oh and no need for you to make these videos anymore.

  7. RetroBlue
    July 18, 2021 at 2:36 am

    In the future, gold will be worth more because theirs a lack of it.

  8. MGTOW CHAMPION
    July 18, 2021 at 2:36 am

    Robert kiyosaki would like to have a word with you with a baseball bat

  9. MGTOW CHAMPION
    July 18, 2021 at 2:36 am

    1:17 and it will be worth a lot more in 5 years you fucking idiot.

  10. Khafre Ahmose
    July 18, 2021 at 2:36 am

    He's correct. Gold shouldn't be viewed as an investment, rather, as a savings mechanism. Gold is a storer of wealth. It's money.

  11. Joseph Hayes
    July 18, 2021 at 2:36 am

    So what you saying, is gold don’t lose its value like paper money does. So it’s safer than saving cash.

  12. 2010 KING
    July 18, 2021 at 2:36 am

    No. This is b.s. buy gold

  13. K J
    July 18, 2021 at 2:36 am

    Why make it so complicated? The formula is simple. Buy gold during economic certainty, sell gold during economic uncertainty. Make money.

  14. Austin lesher
    July 18, 2021 at 2:36 am

    Gold and silver used together can actually generate wealth. Gold to silver ratio right now is 68:1. However gold to silver ratio a year ago was 129:1. If I was to convert 1oz of gold to 120oz of silver last year and used 70 of those 120oz today to convert back to an ounce of gold I will be left today with a profit of 50 ounces of silver.

  15. Anthony Seph
    July 18, 2021 at 2:36 am

    Gold gold gold will grow cold use your power of reasoning, what good is gold if you dont have a use for it!! Its just like the stock market put all your money Into it then I crashes..can you eat gold silver or any so called precious metal nope stop being duped.raise your own veggies/garden that's the real gold gold you can eat..remember to use your power of reasoning, p s dont mind the nay sayers my favorite word logical reasoning

  16. LiteStuff LLC
    July 18, 2021 at 2:36 am

    Prior to the 2008 downturn; 2007 gold was $600 and after the downturn while stocks lost 50% or more, gold rose to $2000 an ounce. Would you rather lose 50% or more or gain 300%? If you see a down turn; protecting your investment value becomes critical; because companies don't always make money; houses and businesses don't always go up they can lose money. These folks also fail to ever mention that gold is critical to the electronics industry because it is the best electrical conductor; and it doesn't oxidize or corrode like silver; so it doesn't react to your body chemistry and won't cause reactions so it isn't just pretty; it is easy to work and a brilliant color so its used in jewelry; dentistry and medical and industrial chemistry. So there is a demand for gold; gold is rare and hence costly to obtain for these purposes.

  17. LinQ
    July 18, 2021 at 2:36 am

    So when SHTF happens, and you have an ounce of gold worth $20000, who's gonna give you that cash…or a check you can't deposit because the banks are closed. It would be easier if they monetized gold, but I doubt they'll do that.

  18. General Bismarck
    July 18, 2021 at 2:36 am

    You just don't want anyone else cutting into "your share" right? xD

  19. ndru star
    July 18, 2021 at 2:36 am

    good and informative video, just needs to lose that irritating and rhythm-less music

  20. David Cole
    July 18, 2021 at 2:36 am

    This guy is clueless huh? I guess he didn't see the incredible money printing with Central Banks out of control. And he is telling us we are better off in the stock market! I have to laugh based on where our economy is at right now.

  21. DETROIT'S NAME
    July 18, 2021 at 2:36 am

    Yup GOLD ALL THE WAY I BOUGHT $1000 IN GOLD AND $1000 IN SILVER

  22. Jesse Ajuda
    July 18, 2021 at 2:36 am

    Never listen to gold advice from a company that makes their money off of people buying stocks

  23. TheOneTheyCallLouwie
    July 18, 2021 at 2:36 am

    Poor video shilling shares derivatives and ponzi rigged stock market. Buy gold it is insurance not an investment and will protect you hard earned wealth from ponzi / derivatives collapse when bubble pops . Motley Fool are pro ponzi derivatives and shares and market for ther own benefit. Pro give your money to the bankers via stock market casino as the little guy never wins. Shame on Motley Fool. How you can compare gold as an investment is beyond a joke. If motely fool tells you something do the opposite. Like they also tell you to avoid bitcoin and buy shares.

  24. Azreen Klose
    July 18, 2021 at 2:36 am

    I don't know if this guy telling truth or just being sarcastic …..the title itself FAQ …..Fools Answer Questions ……

  25. Aleks Osgardov
    July 18, 2021 at 2:36 am

    But gold grows with inflation. Bread now $2 in 10 years may be $8. Same as gold now it's 2k pee bullion in 10 years it will be worth 2.5k. but I'd you keep cash in the safe, 10k cash still be 10k cash, while everything else gew in price. So buy gold for like 10-50 year storage would be good, as it will grow with countries economy and inflation. At least its what history shows. Gold price grew over decades along with inflation, like any item price would. Like 50 years ago a car cost 5k now it's 50k.

  26. t w
    July 18, 2021 at 2:36 am

    I make under 50k and dont have much to save but…might just buy $500 Gold in the next 1-2 months ( cause it might go down a little) and hold it for a rainy day. I’ll also invest a little bit in a low risk crypto with the hope that it will skyrocket…I’ll hold a condo for rental later and add to my 401k. I’ll also save up a little in my savings…I’ll also put into a HSA and forget about it. Hopefully I have a modest retirement.

  27. Darren Siebrits
    July 18, 2021 at 2:36 am

    This is ridiculous lol

  28. Wesley Weisberg
    July 18, 2021 at 2:36 am

    Their percentages for gold value increase over a 30 year period is wrong. Gold jumped almost 700% in the 2008 crash and in all since the 1920’s has rocketed almost 10,000%, consistently gaining and preserving wealth. When gold drops in price it just means it’s on sale, that’s the difference.

  29. Nothing Real
    July 18, 2021 at 2:36 am

    Ok investing in real estate is not always ideal. My house in 2007 was worth 500.000 in 2010 fell down to 200.000
    Income from rent has also so much taxes, that’s why I choose gold.
    Not as an investment rather as a safe thing for my savings

  30. TorontoOpal
    July 18, 2021 at 2:36 am

    Boy that was wrong

  31. Daniel B
    July 18, 2021 at 2:36 am

    If society loses faith in dollars, you will likely see losses in assets that can be offset by owning some gold.

  32. David Jansen
    July 18, 2021 at 2:36 am

    Gold is not investment. It is to hedge against inflation. You don't buy gold for investment. I use gold to protect baseline wealth. It's crazy so many people don't understand what gold used for

  33. AmericanBulldogFit
    July 18, 2021 at 2:36 am

    "Fool" being the operative word here.

  34. aussiegirlintheUSofA
    July 18, 2021 at 2:36 am

    I disagree. Fiat currency is going to crash. The central bankers WANT that.

  35. Pinned by Kati Tutorials
    July 18, 2021 at 2:36 am

    Bitcoin has been described by crypto enthusiasts as the new gold, and in 2017 the price of 1 Bitcoin reached parity with gold (by ounce in USD). And now its almost 10 times the value of gold, that's why its correct to say that crypto has been a better investment than gold, and will be. If you're an investor, invest in the future by investing in crypto currency. I started with the trial package as a rookie investor too, I didn't have a clue on what it was but i was convinced that I should try it out

  36. Mitch Kuchenburg
    July 18, 2021 at 2:36 am

    'fool.com'
    That tells you all you need to know about this dude's advice…

  37. Chris Ashley
    July 18, 2021 at 2:36 am

    I bought gold at around 1200 now it is 1800. It may not go up but it holds it's value as the dollar goes down.
    I bought a cottage rented it out Spent more on repairs, had to deal with the people. Sold at a loss.
    So for me Silver and gold has been a much better investment without the headache or up keep of renting a place out.