The rise in gold prices led many people, including some “financial advisors”, to think that putting money in investment vehicles that bet purely on price of gold is a good strategy. This is evidenced by the return of the popular gold savings account and the introduction of gold ETFs like GLD and IAU.
In my opinion, investors should exercise caution and take a serious look at the following figure derived from the book “Stocks for the long run” by Prof. Siegel.
Larry Swedroe puts it this way:
1. Any commodity is bad investment IMO — (since there is) no expected real return .
2. Equities however must have an expected return to compensate for the risks, so if you are going to invest in gold IMO the way to do it is NOT to buy gold itself but to instead by gold mining stocks (which of course now involves equity risks, but at least there is compensated risk being taken).
My conclusion? Buying gold looks like speculation to me.