When you’re talking to a gold bug it is much like arguing with a priest about religion but to my gold bug friends here, again, is why I’m not that big on gold. Words: 725
In further edited excerpts from his original article* Steve Christ (www.wealthdaily.com) goes on to say:
Being heavily ‘invested’ in gold has always represented something of an Armageddon trade to me because in order for you to really profit from it in the long term, things would have to fall apart and stay that way.
In that regard, I don’t know that I’ll ever be that pessimistic about the future — even though I understand the dangers of debt, the printing presses, and a devalued dollar. In fact, I’ve written about all of them.
What’s more, I’ve always wondered how the gold bugs planned to cash in on their big payday when it finally arrived. Personally, I would rather own 50 lb. bags of beans and rice.
I also never understood anyone who ever said that gold was a “can’t lose investment” because somehow it’s “real money,” not a fiat currency. You see, fiat is a word that the gold crowd loves to sprinkle on top of every argument, as if the dollars in my pocket are as illegitimate as crooked third-world dictator. Just because it sounds scary doesn’t make it so.
The truth is gold as an investment is as fraught with risk as any share of stock, bond, or piece of real estate. You can and will lose money on the shiny metal if you buy the highs and hold on to it. It’s just that simple.
If you doubt this fact, just ask anyone who bought gold at the peaks in last gold craze. Thirty years later, the price would have to reach around $2100 today for that person to break even on an inflation adjusted basis … and that’s not including the carrying costs. Keep in mind, gold is a static investment that produces no cash flow.
Here’s the real reason I prefer stocks to physical gold: stocks offer investors, a piece of a pie that grows, not one that will always remain the same size.
That’s the key difference for me — and why I would rather invest in a company with a bright future and dividend than a shiny piece of metal that might be the currency of the Apocalypse.
Now can stocks lose value? Of course they can…but I have 5,000 of them to choose from and if I do my homework, I’ll find more winners than losers over time — my portfolio proves this.
On top of that, I can spread my risk across several different sectors, limiting the downside in markets that aren’t correlated. This is the real point in writing this article. When I want to sell, the market is always liquid enough for me to make an exit — something that is much more difficult to do with “hard assets.”
I suppose if I were a gold guy … if I had to choose … I would rather own the miners than physical gold itself but, that being said, I do think gold can go higher here without question.
In the longer term … say the next 10 years … who knows but as I said earlier, gold really isn’t my thing and I wouldn’t go all-in on it. Nevertheless, this is a trade that bears keeping an eye on and if, and when, it develops, I would be more inclined to go long GDX — the Market Vectors Gold Miners ETF — or an individual miner.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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