I know people out there who have invested a lot in gold under the belief that in the event of like complete societal collapse or hyperinflation, they could use it for purchasing.

I have the hunch it’s a scam, but I haven’t learned enough monetary theory, business, or economics to understand why.

  • UnderpantsWeevil@lemmy.worldEnglish
    2·
    2 days ago

    please don’t say gold is almost guaranteed to go up…

    I mean, in so far as inflation is almost guaranteed to occur in a productive economy, gold is almost guaranteed to go up over the long term.

    A better question might be “Is an investment in gold going to outperform another asset class?”

    I looked into it as well but in the end went with a Gov Bond ETF instead.

    That’s been the gambit with gold for a while. Point to a short term up-cycle in price and insist that’s a long term ROI you can count on.

    But when you look at the actual price history

    there are long periods when the price is either flat or negative. Risk of holding gold relative to, say, the S&P or even basic Treasuries can get pretty high, unless you’re very confident we’re in one of those rare '04-'11 sustained price rises.

    Even as a hedge against short term downturns, it kinda sucks. If you look at the big historical recessions - '81, '90, '01, '08, '20 - the price of gold had typically already jumped ('01 being a notable exception) and subsequent years were fairly flat. Spikes in gold prices aren’t a bad prediction of future recessions, but they rarely make for good shelter on the eve of the crash.