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IQP Report
with Andy Ortiz
Gold. The word alone sets pulses and imaginations racing. It’s been coveted by cultures and civilizations across the globe for thousands of years as a symbol of beauty, wealth, and power. But let’s look beyond the allure and see how gold looks in balance sheet black and white…
Some consider gold an excellent hedge against inflation. Currency values fall with inflation even as gold values tend to rise. Gold values also increase when larger entities—central banks, for example—buy more of it. Gold is also an excellent diversification vehicle in a portfolio due to its decreased risk. Instability of any kind, Middle East unrest, for instance, can drive many to invest in gold.
However, gold does have its downsides… When interest rates rise, many sell gold in favor or instruments with higher yields. Gold, in fact, has no yield! Gold doesn’t pay dividends or interest. Storage is also a problem. The costs to store, secure, and more importantly insure physical gold can be extremely prohibitive.
So, What's The Verdict?
The price of gold is influenced by a complex set of factors, from world events to government policies to its physical rarity. Also, unlike other investments, there can be strong psychological attachments at play. The emotional urge to buy gold and own gold is highly personal and subjective. All of which is to say, as with any investment, it’s important to do thorough research and consider personal financial goals before diving in.
