Commercials urging people to buy gold have become as common as insects in summer. Celebrities and other promoters urge us to buy gold to protect our investments against inflation and soaring government debt. Is gold currently a good investment? Should we load up on gold in our investment portfolios?
My answer is, no.
Gold's Historical Performance
The long-term history of gold shows it can be an effective hedge against inflation. However, returns to gold tend to be unimpressive compared stocks. The following chart shows the comparison between an ounce of gold purchased in 1925 and an investment in the S&P 500 Index.