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Is Gold A Good Investment? financial news

Gold is one of the largest financial assets in the world with an average daily trading volume of $183 billion, and its value has seen explosive growth in recent years.

At the start of 2000, gold was priced at just $460 per ounce when adjusted for inflation. By August 2021, that number had ballooned to roughly $1,815 per ounce.

But not all investors are in love with gold. Warren Buffett has spoken out numerous times on his doubts, calling it an asset with “no utility.”

“It doesn’t produce anything and that’s why from a long-term perspective, it’s a hard asset to invest in,” Odyssey Capital Advisors chief investment officer Jason Snipe said. “It’s prudent portfolio management to have maybe a small allocation there but this is not an asset that you want to be heavily entrenched into if you’re looking for long-term yield.”

Since 2011, the S&P 500 has returned more than 16% on an annualized basis. The annualized return for the 10-year Treasury note sat at just over 2% in that time period. Gold, meanwhile, has fallen slightly over the past 10 years.

“Early on, you see strong performance, strong return or yield from commodities such as gold. Generally, as we move into a different cycle, gold is not as great a performer as we move into a normalized environment,” Snipe said.

Whether gold is an effective hedge against market volatility is also widely debated among experts.

“Gold is not necessarily a perfect hedge against inflation but it can be a strategic hedge against inflation,” according to Suki Cooper, executive director of precious metals research at Standard Chartered Bank.

“Various studies have shown us that if gold is held for 12 to 18 months before inflation takes higher and then it’s held for an additional 12 to 18 months while inflation moves higher, it can be a good inflation hedge,” Cooper said. “But if it’s just bought for a short period, let’s say a month, it may not prove to be an effective inflation hedge.”

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Is Gold A Good Investment?

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25 thoughts on “Is Gold A Good Investment? financial news”

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  2. Take away points
    1) Gold will never be zero, never be completely replaced by anything and it has it's place in financial role. Why would central bank hold them if they are not?
    2) Whether Gold out perform other assets or not depend on the period that you choose.
    3) Gold is a long term inflationary hedge and not short term inflationary hedge. Gold tend to front run inflation (recently value spike in 2020 before inflation kick in 2021).
    4) Gold is an hard asset and can hedge against deflation especially when we have financial system based on fiat currency. It is because, during deflationary, for short term gold price go down due to liquidity issue but because almost always central banks pump the system back up and Gold will rise up.

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  4. Was it cnbc said mr.buffet investing gold first time.i thought my experience with silver no not a good idea..if recall gold about $1850 oz..hasn't gone up much more but mostly down $1700 .I guess BAC at $1850..

  5. Note the dates chosen for comparing Gold's performance with the S & P, and the 10 year Treasury Note have been cherry-picked by CNBC. They have chosen the last peak of Golds price as its starting point to get the least favourable performance for Gold and compared it with the Share Market after the 2008 Financial Crisis to get the maximum return from the Share Market. It would be far more honest to choose from say 2000 (giving a more longterm performance figure), because that would show that Gold has performed substantially better than the Share market over a much longer period. Clearly the CNBC dont want to tell you the truth and you need to research the truth for yourself.

  6. Western investors tend to underestimate gold. In the east, the trust on gold is absolute, the muslims, indians and chinese have great trust on gold, that is about half of humanity. Sure it won't give you a good return in ordinary time. But it is probably the most stable anchor in stormy days, the kind that we will probably face soon.

  7. Why do central Banks all load up on Gold now, they know something we don’t, you have to look at long term and you not always at profit now

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