with how things have been lately like markets swinging around and all the macro noise, i kinda stopped trying to fit gold into the same box as stocks. it doesnt produce anything, doesnt compound the same way, so comparing it directly always felt off to me.
recently i just treat it as a small stabilizing layer instead of something im trying to optimize. i still keep most of my money in equities, but having a bit of gold sitting there doing its own thing feels different mentally. ive been building it slowly over time, some direct buys and some through something like bullionbox just so it stays consistent without me constantly second guessing.
not saying its better than stocks or anything like that, just feels like it plays a different role entirely. curious how others here think about it, do u treat gold as part of your main investing strategy or more like a separate layer altogether?
gold as stabilizer rather than an investment
byu/No-Caterpillar-2729 ininvesting
Posted by No-Caterpillar-2729
9 Comments
> just feels like it plays a different role entirely
Yes, correct. That’s how it’s supposed to feel.
This is the only way to view gold, for the reasons you said. Nobody should have it as their “main investing strategy”
It is a proven store of value and inflation hedge, but produces no cash flow. Indeed, you pay for the privilege of owning it with some combination of fees, storage and insurance. I don’t know Bullionbox well, but I assume you are paying a pretty high premium over spot gold, which is not good.
The broader topic you’re looking for is asset class correlation, and having multiple investments with low correlation to each other.
Gold and precious metal do have a compound annual growth rate but when factoring in commissions that growth rate has been historically less than stocks.
You probably noticed that all of the gold commercials sell gold as a fear play. That says a lot about the asset. In my opinion, the worst thing about investing in precious metals are the commissions. The roundtrip cost of simply buying and selling the asset can reach double digits, making it even harder to produce a profit. Another issue is liquidity. I don’t like the notion of having to visit one or more brokers to simply obtain a fair value price.
Overall, I’d rather invest in something that I know others are actively working to increase in value as their fiduciary responsibility than something sitting in a safe in hopes that someone else will someday want it for more than I paid, plus commissions.
Well gold is running along with all the tech stocks at the moment because high interest rates are very bad for gold lmao
If you’re expecting this as a stabiliser you will be sorely disappointed
Hmmm, glad my stabilizer has seen over a 300% return since 2018.
Gold is in the same classification as trading cards IMO.
It’s a useless thing by itself (har har, yes gold has a use case as an electrical conductor 🙄), that people assign value to, and that people might pay you more for in the future.
Gold just happens to be a time-tested, super shiny trading card lol
This is, long term, the main case for an average investor holding (say) 5-10% of a portfolio in gold — not the returns long term (2-3% less than stocks), but because they are are beautifully noncorrelated with stocks and bonds and thus reduce volatility without being a huge drag on return (as a modest holding).
But if someone does want to build some gold into their portfolio for dampening volatility, I think that’s fine but one should maintain it in all market conditions, including when gold remains flat for a decade as it sometimes does.
20% of the pf in gold yields the best results