Should you invest in gold in 2022? The cold hard truth why gold is a bad long-term investment.
Investing in gold is certainly a very controversial topic. While Warren Buffett thinks gold has "no utility", for others gold is like a religion. Just search “investing in gold” on YouTube and read the comments on any video, and you will notice that gold is one of those investments that attracts extreme viewpoints and emotional – or sometimes even ideological – arguments that favor narratives over facts and figures. It seems like there is no middle ground.
In this video, I want to take a look at the facts! Here’s what I want to do in this video. First, I will mention why it is important to think about investing your hard-earned money in the first place. Secondly, I will outline some of the core characteristics of gold as an asset that you should be familiar with – because If you have watched some of my videos, you will know that I am a big proponent of only investing in what one understands. In fact, I believe that it is a common rookie mistake to act on advice from others or questionable sources. Warren Buffett once famously said that risk only comes from not knowing what you are doing. So of course you need to do your due diligence if you want to invest in gold; you need to truly understand this asset class. And lastly, in a third step, I will take a look at the historical returns of gold and discuss whether gold has been a good investment in the past (+ I will compare the historical returns of gold to the returns of stocks).
I will also point out that some "gold gurus" will argue that they put gold in their portfolio because it "balances the situation when stocks fall." Firstly, there is absolutely no correlation, either positive or negative, between gold prices and stock prices. Secondly, I encourage people to be long-term investors, and as such, you shouldn't worry about short-term volatility! The only thing having gold in your portfolio accomplishes is that it significantly lowers your expected long-term annual return.
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Historical Gold Prices:
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1:43 Why Invest?
5:55 Characteristics of Gold
10:42 Historical Returns of Gold
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