Gold and other precious metals are often seen as an alternative investment class, with similar standing to shares and property. It may be another asset, but I think it's one of the worst for long-term growth.
Albert Einstein once described compound interest as the eighth wonder of the world, he who understands it earns it, he who doesn't pays it. It's a fantastic quote and it's the reason why shares are the best to own in the long-term.
The key thing to remember with compound interest is that the asset produces profit and that profit can be reinvested into producing more profit.
Gold is a beautiful material, it has attracted people throughout the centuries. However, ultimately, it is just a shiny material. It doesn't generate any profit, dividends or rent. It can't compound if it can't generate any money.
All it can do is go up and down in price. If you want to make any money then you have to hope that you can sell it to someone who will buy it for more from you. Over the last century gold hasn't grown much faster than inflation.
The ASX has a number of gold miners such as Newcrest Mining Limited (ASX: NCM), St Barbara Ltd (ASX: SBM), Silver Lake Resources Limited (ASX: SLR), Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST). This is an alternative way to get exposure to gold and at least some of them generate profit and dividends.
However, gold mining is exposed to all the cyclical forces that BHP Billiton Limited (ASX: BHP) is. Just because they mine gold doesn't mean they are better than any other miner, just that they move with gold prices.
The only commodity businesses that I'm interested in owning are food companies and CSL Limited (ASX: CSL).
Foolish takeaway
To truly take advantage of compound interest you have to put your money into businesses that are making profit and can grow the profit such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
Other options could be some of our favourite growth stocks for this year.
