Ask Stacy: Who the Heck Do You Think You Are?

Better Investing


What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

I recently did a story suggesting that gold might not be a good investment this year. One reader is so convinced I'm wrong, he's threatening to sic the Federal Communications Commission on me.

In this edition of “Ask Stacy,” we have a viewer who takes violent exception to the recent story called 3 Places NOT to Put Money Now. It’s a video and article we published on Jan. 24. In that story, I suggested gold might be an investment to avoid this year.

Here’s the email, in its entirety. I normally correct spelling and grammatical errors in the emails we reprint, but for reasons that will be obvious, I’m putting this one up the way it was submitted.

Hi there, just want let you know you are so ignorant that is not funny at all. You are misleading people by telling them not to buy gold. Now that I understand your IGNORANCE I am going to ask who the heck do you think you are providing such ignorant message to the masses? Have you heard about the word inflation? It is here and we are all paying for it, at the gas pump and the our daily food. So how dare you tell people not invest in an investment that can help them preserve their savings against inflation? Who do you think you are? what are your credentials? If I had the urge and the drive I would have given your name to FCC for airing misleading propaganda.
Be careful, cause I am one step from that. So retract your BS.
Bruce

Here’s your response, Bruce!

First, let’s go back and take a look at the part of the above story that references gold.  Here’s a cut-and-paste that includes everything I wrote concerning gold.

Investment to Avoid: Gold

In a recent article called Gold is a bubble – resist its charms, CNN/Money makes the case that gold is over-priced and due for a fall. Gold has nearly tripled over the last five years – this is a party that could soon be winding down.

From that article…

“When the economy moves from recession to prosperity, there will be little reason to own gold,” says Mark T. Williams, who teaches risk management at Boston University. “And speculators will learn the hard way that gold in times of financial stability is hazardous to investor health.”

As I suggested in the video above, behind the speculative fever that’s driven gold to historic highs is a fear of runaway inflation, global economic Armageddon and other nightmare scenarios. As an improving world economy helps dissolve some of these fears, the need to own gold will decrease, and perhaps, so will prices.

As you can see, much of what I said was a quote from a teacher at Boston University, so maybe he and the writers at CNN Money should also be afraid of the FCC for spreading “propaganda” – or, as it’s more commonly known, “an opinion.”

But we’re not the only ones who should be afraid of the Federal Communications Commission. The airwaves and Internet are filled with opinions on gold prices, both pro and con. Here’s another recent example from this article in Bloomberg  from Feb 2

“No one expects gold to return 30 percent like last year,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “The economy is doing better, and it takes away the bid for gold.”

It’s unclear from Bruce’s email whether all opinions on gold are enough to spark an FCC investigation, or just those that disagree with his.  But there are plenty of people who think gold is still a good investment for the exact same reason he does: as an inflation hedge.

And they could be right, at least about the threat of inflation. Many countries around the world are already experiencing increasing inflation, and as the world economy continues to recover, some raw materials prices are heading higher in a hurry. According to a recent article in the Wall Street Journal called How to Profit from Inflation

During the past six months, oil has jumped 9%, copper has gained 36% and silver has shot up 56%. Agricultural products have soared as well: Cotton, wheat and soybeans have risen 100%, 24% and 42%, respectively.

The Journal and Bruce agree that higher prices for raw materials will lead to higher prices for food, as well as manufactured goods: That’s the textbook definition of inflation.

Where the Journal and Bruce don’t see eye-to-eye, however, is how effective gold will be as an inflation hedge.  The author of the Journal article suggests gold might not work for the exact reason I gave: It’s already moved too much. More from that article…

Gold is another traditional inflation hedge that might be less effective now. With prices already having more than quadrupled over the past nine years, many strategists see substantial inflation already factored into the price.

But as I said above, there are plenty of people who are on Bruce’s side: They’re convinced gold’s going higher. One of many examples? Respected investment manager Jim Rogers, who said this in a Reuter’s article last May

“I certainly expect gold to go much higher over the next few years. Paper money is going to be debased and the price of real assets will be enhanced.”

So who’s right, me or Bruce?

To be honest, I haven’t the slightest idea. I thought long and hard before naming gold as an investment that might not perform in 2011, because I can see the other side of the argument. But after doing a bit of reading, I formed the opinion that Bruce labeled  ingorant propaganda.

Proponents of gold, including Bruce, could be right: Gold may continue to shine. If it does, however, that’s OK, because I still own about $15,000 worth of a gold ETF in my real-money online portfolio. But at the slightest hint that the gold bubble is about to burst, I’m gone.

A few final thoughts:

  • If you’re going to write and call me ignorant, you might want to check your spelling and grammar first.
  • Rather than ask who I think I am, or ask for my credentials, simply read about my background here and find out.
  • If you’re so enamored with an investment that you rabidly defend it without even considering other opinions, sooner or later  you’re going to have your hat handed to you.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: Considering a Fixer-Upper? 15 Ways to Avoid a Money Pit

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,975 more deals!