If you’ve ever wondered why gold has such a strong hold on the mind of the investor, this article does a good job explaining it.
Go for the Gold? [Adam M. Grossman on Humble Dollar] – “In other words, gold is arguably the world’s oldest store of value in continuous use, and that, too, has contributed to its unique reputation.
A reason for its longevity is perhaps that gold, unlike traditional paper money, isn’t under the control of any government, helping to preserve its value. By contrast, it’s easy for governments to issue new currency, which has the effect of debasing the value of existing money in circulation, including consumers’ paychecks and savings. We witnessed that during the pandemic. To support the economy, the Federal Reserve created approximately $3 trillion, much of which Congress distributed in the form of stimulus checks. This was a key contributor to the inflation spike we saw in 2022.”
Make you get to the end of the post because Grossman shares: “Thus, gold seems uniquely appealing. Still, I don’t recommend it. Why? Despite its reputation, gold hasn’t always been a reliable hedge against inflation. It certainly did well in the 1970s. But aside from that, gold hasn’t always delivered. Even in 2021 and 2022, when inflation was high, gold investors didn’t do terribly well. And when inflation began to subside, gold gave up whatever gains it had achieved.”