The Motley Fool

Why Gold is a poor investment

In these turbulent times many investors choose to flee to gold as a safe haven, rather than investing in equities or businesses. Gold is viewed as the ultimate hedge against inflation, as there is a limited global supply compared to fiat currency. While the value of any national currency depends significantly on the amount of tender issued by the country which the investor lives in, this clearly cannot take place with gold.

However, gold makes for a poor investment because it is simply not a productive asset. As opposed to purchasing a business or making an investment, where you are hoping to receive earnings through dividends and expansion, the value of gold is determined by how much traders are willing to purchase gold for. The price of gold generally increases when the economy is in a downturn and there is widespread fear, while the gold price generally tends to lag the broader management when investment conditions are more favourable. The gold itself however, does not actually produce anything.

The fact that gold is not a productive asset has meant that historically it has only barely outperformed inflation as an investment. While buying gold is like going long on fear and hoping people become more and more fearful, investing in businesses is evaluating the earning power of a company betting on human production – which has been a far better bet the
last couple of centuries.

3 Growth Shares To Buy In April

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Marcello Pinto has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now