Should You Buy Gold Now?

Should You Buy Gold Now?

Gold seems to make headlines every day now that it is trading at all-time highs. Silver has been skyrocketing too. 

If you don’t own any gold or silver, should you buy some now? If you do already own some, should you buy more? 

I’ve never been a gold bug. You’re supposed to own gold for a number of reasons, including having it as a store of value when the spit hits the fan. 

However, my thoughts on gold were formulated by talking to family members who were in Europe during World War II. Gold did not come close to holding its value during the chaos, regardless of what the official exchange rate was.

A loaf of bread or a night’s rest in a barn after fleeing across the border was going to cost you your gold or other valuables. There was no bargaining. If you were starving or needed a place to hide, you handed over what you had or risked the consequences.

Those were extreme times, but those kinds of circumstances are exactly why some people want an ample supply of gold for themselves.

And some claim that with countries, and especially the U.S., printing money as fast as possible, ballooning the debt and devaluing their paper-based currencies, gold is the only real money.

But gold doesn’t generate dividends or produce cash flow and is worth only what the next person is willing to pay for it. There is no way to appropriately value an ounce of gold. Whether it’s worth $400 an ounce or $4,000 an ounce is pure speculation.

That being said, I do believe gold belongs in your portfolio.

Over thousands of years, gold has more or less kept up with inflation. There’s an old axiom that an ounce of gold typically has the same value as the price of a man’s quality suit.

Obviously, the price of gold will have strong moves higher and lower, but over time, that is generally perceived to be the value.

Today, gold sits at around $2,000. That’s a pretty darn nice suit. You can get a high-quality suit at Nordstrom for half that amount or probably less.

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