2-Minute Money Manager: Should I Buy Gold?

Welcome to the 2-Minute Money Manager, a short video feature answering money questions submitted by readers and viewers.

Today’s question is about precious metals; specifically, whether you should buy gold and silver, then take physical possession of it.

I’ve been fielding questions about precious metals since I became a Wall Street investment adviser 38 years ago. Because gold is a “safe haven” investment — one thought to protect against political or financial turmoil — it’s often associated with those on the fringes of society. But gold isn’t just for the survivalist set.

Watch the following video for my take. Or, if you prefer, scroll down to read the full transcript and find out what I said.

You can also learn how to send in a question of your own below.

One of the best ways to determine whether my past advice regarding gold has been accurate is to check out past recommendations I’ve made. For example, “Ask Stacy: Is It Time to Buy Gold?” is an article from 2016 and here’s an article from 2011. You can also go to the search at the top of this page, put in the word “gold” and find other information on this topic.

Also, remember that if you need anything from a better credit card to help with debt, you’ll find it in our Solutions Center.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, everyone, and welcome to the 2-Minute Money Manager. I’m your host, Stacy Johnson, and this two-minute answer is brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.

Our question today comes from Pamela:

I received an email from a company that will deliver gold and silver to your door. Is this a good investment strategy?

Here are three things to know, Pamela:

Thing No. 1: Gold is a horrible investment

I’ve been investing for around 40 years, and there have been times when gold has done well. But let’s look at the facts: Gold was $1,300 an ounce five years ago. And guess where it is today? Around $1,300 an ounce.

Now, guess what the stock market has done during that same five-year period: It’s up 70 percent.

So, gold isn’t really a great investment, or at least it hasn’t been in recent years. Why do so many people want to own it? Investors are often interested in gold not as a primary investment, but as a hedge against some sort of calamity, like political upheaval and runaway inflation.

Thing No. 2: Delivery? Not for me

Do you want gold or silver delivered to your door? I don’t. I actually had some gold coins in my home a few years ago, and they were stolen by someone I’d hired to work around the house.

If you want to take delivery of gold, be my guest. But why? Often people use scare tactics to try to convince you to buy gold. They imply the government is on the verge of collapse, money is going to become worthless, and you’re going to need gold to survive.

That may be true. Anything’s possible. But in my experience, while the world may occasionally look like it’s coming to an end, it’s not. And even if it is, you’d be better off owning a shotgun and canned goods than gold.

Thing No. 3: If you are going to own gold, try an ETF

After all this, you’d probably assume I don’t own gold. In fact, I do. Not because I think the world is coming to an end, but as a hedge against both inflation and potential political turmoil.

The only gold I own, however, is in the form of an ETF, or exchange-traded fund. Like a stock, it trades on an exchange and I can buy or sell at will. The ETF I own (GLD) holds actual gold that’s stored in a vault. The price of the ETF moves with the price of physical gold. Same investment, less hassle.

Bottom line? If you want to own some gold, I won’t dissuade you. But I would suggest you don’t take physical delivery and don’t put more than 10 to 15 percent of your long-term savings there.

I hope that answers your question, Pamela. Meet me right here next time!

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About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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