Gold generates no income and offers no yield. It is an inert metal. And many gold owners pay to store it.
Why in the world would an investor own such a thing?
There are two good answers to that question: one for long-term ownership, and one for ownership right now.
As famed speculator Doug Casey has long pointed out, there’s nothing magical about gold. Every element eventually finds its best use. Aluminum is best for airplanes. Uranium is best for nuclear power. Paper is best for books.
- Among the 92 naturally occurring elements in the earth’s crust, gold is the one best suited for use as money.
One trait that makes gold best suited as money is longevity—it lasts forever. Literally. The same gold hauled around by King Tut can be melted and recast into beautiful American Eagle gold coins, with almost zero waste and no loss of luster.
Gold is deeply embedded in our psychology as humans. It’s instinctual—most people readily understand gold’s value when they just hear the word.
When you hold gold in your hand, you are convinced.
"The desire for gold is the most universal and deeply rooted commercial instinct of the human race." —Gerald Loeb, a founder of E.F. Hutton
Gold also has industrial uses, but you can’t really label it a commodity like, say, pork bellies or wheat.
Gold is a beautiful adornment and has been sought for status and vanity for centuries. But jewelry demand has little impact on its price.
Gold is money, period.
Once an investor understands that concept—sees it as the ultimate store of value and not as a commodity or adornment—the need to own it becomes clear.
One of the most convincing cases on why gold is money comes from Mike Maloney in his Hidden Secrets of Money series.
Once you watch episode one, the lightbulb clicks on for most people. It answers the big picture question of "why gold."
Now you have the answer to why own gold for the long-term: it is legitimate money.
There’s another reason, one directly linked to our circumstances today (see Gold: The Ultimate Financial Insurance Policy)...
