Gold is the train wreck trophy wife of your financial portfolio

Provided by Michael Taylor of the Houston Chronicle:

A significant portion of the Financial Infotainment Industrial Complex dedicates itself to selling you gold, as an investment.

I’m here to tell you: Resist.

I have already written about the three other horsemen of your personal financial apocalypse: variable annuities, time shares and bitcoin.

The commonality of these four horsemen is that they are sold to credible people as “investments” when they are really the opposite of investments. All four act as a drain on your net worth.

Gold fails the fundamental test of what constitutes an actual investment…
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Why gold doesn’t glitter as an investment

Gold and other precious metals are often seen as an alternative investment class, with similar standing to shares and property. It may be another asset, but I think it’s one of the worst for long-term growth.

Albert Einstein once described compound interest as the eighth wonder of the world, he who understands it earns it, he who doesn’t pays it. It’s a fantastic quote and it’s the reason why shares are the best to own in the long-term.

The key thing to remember with compound interest is that the asset produces profit and that profit can be reinvested into producing more profit.

Gold is a beautiful material, it has attracted people throughout the centuries. However, ultimately, it is just a shiny material. It doesn’t generate any profit, dividends or rent. It can’t compound if it can’t generate any money… Read Full Article

How to Lose Money: Invest in Gold Stocks

“How to make a million? Start with $2 million – and invest in gold stocks!” – The Maxims of Wall Street (revised for gold bugs).

What is by far the most dangerous and high-risk sector of the market? Gold stocks!

Recently, I spoke at a gold bug convention, and after my talk, I was surrounded by several doctors, lawyers and other professionals who confessed that they had lost 70% of their portfolios.

“How is that possible?” I asked. “The stock market is at an all-time high!”

“We listened to the doom-and-gloom talks from speakers at this conference five years ago,” they admitted. “We sold out of the stock market and bought mining companies promoted here at this conference.” … Read Full Article

Economic Expectations Spells Trouble for Gold Price

Behavioral finance points to $1,050 gold price

Frankfurt-based Sentix, a leader in the emerging field of behavioral finance, has been compiling sentiment indices since 2001 by surveying more than 4,500 institutional and private investors.

The latest reading of the Sentix index of economic expectations spells trouble for the gold price.

Capital Economics, a London-based researcher, in a research note points to this graph to provide support for its prediction that the gold price would be trading at $1,050 an ounce by the end of the year… Read Full Article