Carl Richards has a fascinating little article up at the NY Times that is sure to generate lots of hate mail:
Gold is not an investment. It’s a speculation.
Investments are made by evaluating underlying value. Speculative bets are made by looking at the price of something and simply hoping the price goes up. Investing is about value; gambling is about price.
Gold has no real underlying value. I know there is a market for it. I know it is real, just like real estate was real in 2007.
But what is the value of a bar of gold?
It has no value except the one assigned by a herd of speculators. This is true for most commodities. They don’t actually produce anything. They are raw material. No value. No dividend. No cash flow.
Note that he does not say you should not own gold, or that its a scam, or hat its going to zero. His comments are that people buying gold have no true way to value ti, and therefore are speculating, not investing.
Gold is Not an Investment
Bucks Blog, May 23, 2011, 12:53 PM