Have you socked your money away in ounces and ounces of gold because you are concerned about your savings holding its value in a time of rampant inflation or disaster on a massive national or worldwide scale?
If so, Peter Hug at Canadian precious metals trader Kitco thinks there is a decent likelihood that you are sort of a kook.
Hug made his declaration last month at an Inside ETF Conference, CNNMoney reports.
He described investors who fear severe economic calamity as “crazies.” Such “crazies,” he speculated, make up about 25 percent of the American market in physical gold.
“These investors buy the metal and it just disappears. It goes under their mattress. They want to use it when the world ends,” Hug told CNNMoney.
Advocates of investment in gold disagree with Hug’s opinion.
“The fears of an economic collapse in the United States are not irrational,” gold enthusiast and American entrepreneur Peter Schiff told CNN. “I think it’s more irrational when people are complacent that nothing can go wrong.”
Schiff did observe that it would be really stupid only to own physical gold.
“That is being too fearful and maybe obsessed with it,” he said. “But is that any less rational than the person who owns no gold whatsoever?”
Schiff recommended owning an investment portfolio that includes between five and 15 percent gold.
Like any other kind of stuff available for sale, gold has fluctuated in price over time, generally in an upward direction. It spiked to over $1,800 per ounce in 2011 in the midst of the Great Recession.
In 1985, the price for an ounce of gold was about $330. Today, the price for the same ounce of gold is about $1,225.
That might seem like a decent increase in value.
Consider, however, that had you instead purchased $330 in Apple stock in 1985, you would now have some 82 shares of stock worth about $10,370 — a figure that doesn’t account for stock splits or any other such things.
Had you bought a more boring stock in 1985, say, Campbell’s soup, you’d still have about $3,900. That amount is over three times more cash than you have accumulated had you bought glittery gold.
Of course, if the world ends in a huge explosion, your little pieces of Apple paper and Campbell’s paper will be worthless. And then where will you be, huh?