Gold

I wanted to make a few comments about gold because it's been on a bit of a tear and there are a lot of questions about whether or not to own some gold, trade it, etc. I'm not a big fan of gold as an investment, it pays no interest or dividends and can be expensive to store (physical gold, not an etf.) I do not trade gold but I do own some. The reason I own gold is the same reason I own fire insurance on my house. It's an insurance policy, that's it. If we somehow end up in some sort of Ayn Rand/Book of Eli armageddon, the wheels have completely come off and folks are pushing wheelbarrows around, that kind of thing, then having some one ounce gold coins around might be worthwhile. So if I pay $1200 an ounce and in three years it's worth $850 I don't care. It's simply a cost of insuring my financial life against a worst case scenario, like fire insurance is a cost of owning my home.

Now I don't subscribe to the whole survivalist, fundamentalist christian, the end is near stuff. I really don't. I think the likelihood we have to take the hills and start speaking Latin is about the same as getting hit by a meteor. Actually, the meteor strike is a higher probability. But, just the same, I will be happy to pass the gold I own on to my daughter when I'm dead.

I also support the idea of taking some money from a portfolio and owning gold as a diversification from other financial instruments. I think many people have the vast majority of their wealth tied up in home equity, retirement accounts and brokerage accounts that are equities and bonds. Why not take a percentage of that and own art, cars, horses, gold, something that you are interested in and has value. Nothing wrong with that at all. It's a lot more fun to buy a painting or a bar of gold then another 100 shares of IBM. IBM is probably the better long term investment but it isn't very fun or interesting.