The Long Term Investor

The Gold Rush—Should You Invest in Gold Now? (EP.195)

Mar 12, 2025
Gold prices are soaring to near-record highs, prompting a deep dive into whether it's a wise investment. Central banks are boosting demand, which could reshape investment strategies. The discussion reveals gold's mixed reputation as an inflation hedge and its unpredictable nature. Misconceptions about gold's long-term performance are challenged, highlighting its lack of yield. The importance of a holistic financial approach rather than reactive market timing is emphasized. A must-listen for anyone curious about gold's role in their portfolio!
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INSIGHT

Why Gold Prices Are Rising

  • Central banks are buying gold to diversify reserves and protect against geopolitical risks and currency instability.
  • Changing investor sentiment, driven by inflation and policy changes, also contributes to gold's appeal.
INSIGHT

Gold's Role in Diversification

  • Gold has no earnings or income, making it difficult to determine an expected rate of return.
  • While gold has a low correlation with traditional investments, its volatility can increase portfolio risk.
INSIGHT

Gold as an Inflation Hedge

  • Gold is often touted as an inflation hedge, but historical data doesn't support this claim.
  • Gold's volatility undermines its reliability as a hedge against relatively stable inflation.
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