Investing in Gold

This blog is not one devoted to personal investing but it's hard not to comment on all those ads trying to get people to invest in gold. Certainly any commodity will bring the promise of returns if held and then sold during the right market cycle.

I remember when gold was around $600 an ounce back in 1980. So now it is up again. Which means if you had invested in gold back then it would have provided a return of less than 2% per year. This means if you had put a $100 in gold back then, today it would be worth about $180. By contrast, the Dow was in the 1,000 range back then. Today it is around 9,500 even with last years major bust. So a $100 in the market then would now be worth $9,500. And that doesn't even account for the dividends. Need I say more?

My belief is that investing in gold is a bet against America and it's future. It's saying that the dollar will continue to lose strength against gold and other commodities. If you believe that America is a goner, then investing in gold may be a good idea.

Also, where do you put all that gold you buy? If it is in certificates, then how confident can you be that it is backed up with real gold? If you bought the real coins, then how secure is your vault at home? (get ready for the vault ads)