Now you're all here for the golden question, should you invest in gold and well I won't clickbait you guys its No. Despite what you guys may hear about how gold is a safe haven against an economic crash and inflation, gold is one of the worst investments you can make. So if you guys are interested to learn why go ahead and smash that like button and let's hop into it. First off It has no real value. Gold is only worth what people are willing to give for it and 80% of gold production is for jewelry which is purely sentimental and even then it needs other metals like copper and silver to be strong enough as jewelry.
As Warren Buffett once famously said: Gold 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.
Secondly, Gold is not any sort of protection against inflation. In 1979, 40 years ago, gold was trading for 226 dollars an ounce which is worth around 800 dollars in today's money. And in today gold is worth around 1,500 dollars an ounce. That means that after being adjusted for inflation gold has gone up 90% in the past 40 years meaning the value of gold has gone up 1.9% each year whereas inflation goes up on average 3% each year. So in the past 40 years, gold has been steadily losing value. Which is the opposite as a guard against inflation. As a reference buying bonds can return you around 4-5% monthly and investing the stock market will return you around 7-8% annually.
Additionally, it's not apocalypse safe. A lot of people believe gold is some kind of a barrier against an economic collapse of the U.S dollar or the U.S treasury defaults or something like that. In fact, when the economy does really well no one is buying gold and when the economy is doing poorly that's when gold prices skyrocket. Because again people have a fear of the economy crashing and use gold to help ease that fear. But never in the history of the united states has the treasury ever defaulted and if the U.S dollar does somehow become worthless well its a global economy and that would cause the entire world's economy to crash ensuing chaos worldwide. In which case having a little farm in the countryside would do you a lot better than your stashes of gold.
Lastly, gold is a large physical thing that you're going to have to bid on and keep. So first off there's no store for gold with set prices, you have to bid on gold in which case you already may have just lost money, then you have to have the gold shipped to you which is expensive and then you have to store it which poses a risk of theft fire and earthquakes or pay someone else to store it for you which is another loss.
Now just as a note, I'm not saying that is useless, gold does, of course, have value in dentistry, medicine, electrics, etc. And of course, it has a long history as a currency and how it shaped other currencies around the world. I could, of course, give you guys a history lesson about why it's so important but Lost story short gold is just a terrible investment and its prices are correlated with our fear of the economy crashing into chaos.
So thats the video guys thank you so much for watching. If you enjoyed the video or learned something new be sure to smash that like button and subscribe if you want to learn more about personal finance and investing. Take it easy and until next time.
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