Gold buyers and gold owners love gold. But traditional investors? Not so much.
Here are three reasons why not.
1. Gold doesn’t pay a dividend.
Many stock investments, in addition to offering capital growth, also often annual dividends. In fact, many investors seek out those companies which consistently pay dividends to their investors. Even when the market is moving down, an investment can still reward you with those annual payments.
And it’s true, buying gold doesn’t offer you that, whether you buy gold to take possession of it yourself, or buy it in allocated or unallocated storage.
2. Gold prices are too dependent on the dollar.
Often true. All other things being equal, gold prices do tend to move in the opposite direction of the dollar. If the dollar falls, gold prices usually go up. Investors in stocks don’t have to deal with quite the same effect.
For that reason, non-fans of gold prefer to invest in companies, or in groups of companies through mutual funds, and avoid the fickle ups and downs of the dollar.
3. Gold has no significant industrial uses, so price movements are less predictable.
Well, that’s also true. There is no industrial demand for gold that is large enough to act as a damper on the ups and downs of gold prices. It doesn’t have that kind of “constant” to give its price some stability.
But…
The problem with all these arguments is that they are comparing apples with oranges. They assume that investing in or owning gold should is some way be the same as investing in stocks.
But that isn’t the case. And that’s what many of us love about gold. It absolutely marches to its own drummer.
And, of course, if you buy gold to keep it, and own it over the long term, you are not particularly concerned by its weekly, monthly or even annual ups and downs.
All we ask is that gold prices keep pace with inflation, thereby securing a part of our wealth for the future, safe from the ravages of Wall Street. (“ravages” or “savages”?)