Carl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog and on his personal Web site, BehaviorGap.com.
Gold is not an investment. It's a speculation.
Investments are made by evaluating underlying value. Speculative bets are made by looking at the price of something and simply hoping the price goes up. Investing is about value; gambling is about price.
Gold has no real underlying value. I know there is a market for it. I know it is real, just like real estate was real in 2007.
But what is the value of a bar of gold?
It has no value except the one assigned by a herd of speculators. This is true for most commodities. They don't actually produce anything. They are raw material. No value. No dividend. No cash flow.
Investing in gold is a very dangerous game right now. Whenever the price of something rises as much, and as quickly, as gold has, we need to stop and consider the end game. While in Florida last week, I was surprised to see guys standing on the street waving "We Buy Gold" signs. They looked exactly like the guys I used to see all over Las Vegas with the signs announcing open houses and touting real estate as a sure bet.
Remember when your brother-in-law told you that you had to invest in real estate because they weren't making any more of it? Or the common justification people used — that at least with real estate you could see, touch and feel it? It was real! And how did that work out?
Now I hear people using the same argument for gold. It's real. Tangible. And you can enjoy it because it's pretty. But what does that have to do with investing?
Keep in mind that there are huge institutional players in the gold market right now. When they decide that the run is over, there won't be time for you to run to your safe in the basement, pack up all your coins and gold bars, run to the local pawn shop and get rid of the stuff.
I have no idea where the price of gold is going, but for me it doesn't matter. But if George Soros is selling while your grandmother is buying, you have to wonder who's more likely to get hurt. The point here is that it (literally) pays to consider that the time to bet on gold was 2007. At this point if you are counting on the gold under your bed to fund your retirement, things could get very ugly.
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Nominate your child's toughest money questions. Read all related posts >> High Net Worth Wealth MattersPaul Sullivan writes about the strategies that the wealthy use to manage their money and their overall well-being.
Previous Columns >> Special Section Financial TuneupAll of us need to take some time every so often to knock things off of our financial to-do list. To help, we've created a series of articles and an interactive checklist to get you started.
Checklist: 31 Steps to a Financial Tuneup Calculator: The Big Difference a Single Percentage Point Makes Financial Tuneup Podcast The Complete Guide to the Financial Tuneup >> Your Money Calculators Save One PercentIncreasing your savings by one more percentage point "“ or even better, another percentage point a year "“ can add up to big additional savings over time.
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Related Article » Recent PostsMay 24 //
What Would You TakeCarl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog and on his personal Web site, BehaviorGap.com.
Gold is not an investment. It's a speculation.
Investments are made by evaluating underlying value. Speculative bets are made by looking at the price of something and simply hoping the price goes up. Investing is about value; gambling is about price.
Gold has no real underlying value. I know there is a market for it. I know it is real, just like real estate was real in 2007.
But what is the value of a bar of gold?
It has no value except the one assigned by a herd of speculators. This is true for most commodities. They don't actually produce anything. They are raw material. No value. No dividend. No cash flow.
Investing in gold is a very dangerous game right now. Whenever the price of something rises as much, and as quickly, as gold has, we need to stop and consider the end game. While in Florida last week, I was surprised to see guys standing on the street waving "We Buy Gold" signs. They looked exactly like the guys I used to see all over Las Vegas with the signs announcing open houses and touting real estate as a sure bet.
Remember when your brother-in-law told you that you had to invest in real estate because they weren't making any more of it? Or the common justification people used — that at least with real estate you could see, touch and feel it? It was real! And how did that work out?
Now I hear people using the same argument for gold. It's real. Tangible. And you can enjoy it because it's pretty. But what does that have to do with investing?
Keep in mind that there are huge institutional players in the gold market right now. When they decide that the run is over, there won't be time for you to run to your safe in the basement, pack up all your coins and gold bars, run to the local pawn shop and get rid of the stuff.
I have no idea where the price of gold is going, but for me it doesn't matter. But if George Soros is selling while your grandmother is buying, you have to wonder who's more likely to get hurt. The point here is that it (literally) pays to consider that the time to bet on gold was 2007. At this point if you are counting on the gold under your bed to fund your retirement, things could get very ugly.
Children often ask tough questions about money. In a series of posts this month the Bucks blog will discuss them one by one. We invite you to answer a few yourself or suggest new ones that your children have asked.
Paul Sullivan writes about the strategies that the wealthy use to manage their money and their overall well-being.
All of us need to take some time every so often to knock things off of our financial to-do list. To help, we've created a series of articles and an interactive checklist to get you started.
Increasing your savings by one more percentage point "“ or even better, another percentage point a year "“ can add up to big additional savings over time.
An interactive tool to estimate the future cost of higher education.
Compare the cost of renting and buying equivalent homes.
See how long it could take for your portfolio to return to its peak value.
May 24
What Would You Take With You in a Disaster?What would you take with you if you had to flee in a disaster?
May 24 //
Tuesday Reading: Midlife Fitness Can Predict Long-Term Heart HealthMidlife fitness predicts long-term heart health, Bank of America settles overdraft fee case, Do@ tries to speed mobile searches and other consumer-focused news from The New York Times.
May 23 //
Tools to Negotiate Car Deals in a Tough MarketElectronic tools can help you bargain for a car in a tight market.
May 23 //
Gold is Not an InvestmentWhen speculators are setting prices, bad tidings almost always follow.
May 23 //
Monday Reading: Technology to Prevent Drowsy DrivingTechnology to reduce drowsy driving, preparing your pet for air travel, a bad year for car bargains and other consumer-focused news from The New York Times.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 85 TAXES 67 BUDGETING 66 CHECKING ACCOUNTS 58 RETIREMENT 56 BUYING A HOME 52 MORTGAGES 50 INVESTMENTS 43 STUDENT LOANS 41 DEBIT CARDS 41 SAVINGS ACCOUNTS 38 STOCKS & BONDS 36 HEALTH INSURANCE 32 401(K)'S 30 PAYING FOR COLLEGE 30 DISCOUNTS 30 MUTUAL FUNDS 28 EXCHANGE TRADED FUNDS (E.T.F.'S) 27 HOME INSURANCE 21 PHILANTHROPY 21 IDENTITY THEFT 20 HEALTH EXPENSES 19 GAY & LESBIAN 19 ASSET ALLOCATION 17 RELATIONSHIPS 17 BUYING A CAR 16 NEW YEAR'S RESOLUTIONS 15 DIVORCE AND MONEY 15 CREDIT SCORES 14 ESTATE PLANNING 14 Who's Who at BucksRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioAnn Carrns is a freelance reporter based in Fayetteville, Ark.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Site Map © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Terms of Sale Corrections RSS Help Contact Us Work for Us Advertise if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');What would you take with you if you had to flee in a disaster?
May 24
Tuesday Reading: Midlife Fitness Can Predict Long-Term Heart HealthMidlife fitness predicts long-term heart health, Bank of America settles overdraft fee case, Do@ tries to speed mobile searches and other consumer-focused news from The New York Times.
May 23 //
Tools to Negotiate Car Deals in a Tough MarketElectronic tools can help you bargain for a car in a tight market.
May 23 //
Gold is Not an InvestmentWhen speculators are setting prices, bad tidings almost always follow.
May 23 //
Monday Reading: Technology to Prevent Drowsy DrivingTechnology to reduce drowsy driving, preparing your pet for air travel, a bad year for car bargains and other consumer-focused news from The New York Times.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 85 TAXES 67 BUDGETING 66 CHECKING ACCOUNTS 58 RETIREMENT 56 BUYING A HOME 52 MORTGAGES 50 INVESTMENTS 43 STUDENT LOANS 41 DEBIT CARDS 41 SAVINGS ACCOUNTS 38 STOCKS & BONDS 36 HEALTH INSURANCE 32 401(K)'S 30 PAYING FOR COLLEGE 30 DISCOUNTS 30 MUTUAL FUNDS 28 EXCHANGE TRADED FUNDS (E.T.F.'S) 27 HOME INSURANCE 21 PHILANTHROPY 21 IDENTITY THEFT 20 HEALTH EXPENSES 19 GAY & LESBIAN 19 ASSET ALLOCATION 17 RELATIONSHIPS 17 BUYING A CAR 16 NEW YEAR'S RESOLUTIONS 15 DIVORCE AND MONEY 15 CREDIT SCORES 14 ESTATE PLANNING 14 Who's Who at BucksRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioAnn Carrns is a freelance reporter based in Fayetteville, Ark.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Site Map © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Terms of Sale Corrections RSS Help Contact Us Work for Us Advertise if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');Midlife fitness predicts long-term heart health, Bank of America settles overdraft fee case, Do@ tries to speed mobile searches and other consumer-focused news from The New York Times.
May 23
Tools to Negotiate Car Deals in a Tough MarketElectronic tools can help you bargain for a car in a tight market.
May 23 //
Gold is Not an InvestmentWhen speculators are setting prices, bad tidings almost always follow.
May 23 //
Monday Reading: Technology to Prevent Drowsy DrivingTechnology to reduce drowsy driving, preparing your pet for air travel, a bad year for car bargains and other consumer-focused news from The New York Times.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 85 TAXES 67 BUDGETING 66 CHECKING ACCOUNTS 58 RETIREMENT 56 BUYING A HOME 52 MORTGAGES 50 INVESTMENTS 43 STUDENT LOANS 41 DEBIT CARDS 41 SAVINGS ACCOUNTS 38 STOCKS & BONDS 36 HEALTH INSURANCE 32 401(K)'S 30 PAYING FOR COLLEGE 30 DISCOUNTS 30 MUTUAL FUNDS 28 EXCHANGE TRADED FUNDS (E.T.F.'S) 27 HOME INSURANCE 21 PHILANTHROPY 21 IDENTITY THEFT 20 HEALTH EXPENSES 19 GAY & LESBIAN 19 ASSET ALLOCATION 17 RELATIONSHIPS 17 BUYING A CAR 16 NEW YEAR'S RESOLUTIONS 15 DIVORCE AND MONEY 15 CREDIT SCORES 14 ESTATE PLANNING 14 Who's Who at BucksRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioAnn Carrns is a freelance reporter based in Fayetteville, Ark.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Site Map © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Terms of Sale Corrections RSS Help Contact Us Work for Us Advertise if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');Electronic tools can help you bargain for a car in a tight market.
May 23
Gold is Not an InvestmentWhen speculators are setting prices, bad tidings almost always follow.
May 23 //
Monday Reading: Technology to Prevent Drowsy DrivingTechnology to reduce drowsy driving, preparing your pet for air travel, a bad year for car bargains and other consumer-focused news from The New York Times.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 85 TAXES 67 BUDGETING 66 CHECKING ACCOUNTS 58 RETIREMENT 56 BUYING A HOME 52 MORTGAGES 50 INVESTMENTS 43 STUDENT LOANS 41 DEBIT CARDS 41 SAVINGS ACCOUNTS 38 STOCKS & BONDS 36 HEALTH INSURANCE 32 401(K)'S 30 PAYING FOR COLLEGE 30 DISCOUNTS 30 MUTUAL FUNDS 28 EXCHANGE TRADED FUNDS (E.T.F.'S) 27 HOME INSURANCE 21 PHILANTHROPY 21 IDENTITY THEFT 20 HEALTH EXPENSES 19 GAY & LESBIAN 19 ASSET ALLOCATION 17 RELATIONSHIPS 17 BUYING A CAR 16 NEW YEAR'S RESOLUTIONS 15 DIVORCE AND MONEY 15 CREDIT SCORES 14 ESTATE PLANNING 14 Who's Who at BucksRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioAnn Carrns is a freelance reporter based in Fayetteville, Ark.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Site Map © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Terms of Sale Corrections RSS Help Contact Us Work for Us Advertise if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');When speculators are setting prices, bad tidings almost always follow.
May 23
Monday Reading: Technology to Prevent Drowsy DrivingTechnology to reduce drowsy driving, preparing your pet for air travel, a bad year for car bargains and other consumer-focused news from The New York Times.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 85 TAXES 67 BUDGETING 66 CHECKING ACCOUNTS 58 RETIREMENT 56 BUYING A HOME 52 MORTGAGES 50 INVESTMENTS 43 STUDENT LOANS 41 DEBIT CARDS 41 SAVINGS ACCOUNTS 38 STOCKS & BONDS 36 HEALTH INSURANCE 32 401(K)'S 30 PAYING FOR COLLEGE 30 DISCOUNTS 30 MUTUAL FUNDS 28 EXCHANGE TRADED FUNDS (E.T.F.'S) 27 HOME INSURANCE 21 PHILANTHROPY 21 IDENTITY THEFT 20 HEALTH EXPENSES 19 GAY & LESBIAN 19 ASSET ALLOCATION 17 RELATIONSHIPS 17 BUYING A CAR 16 NEW YEAR'S RESOLUTIONS 15 DIVORCE AND MONEY 15 CREDIT SCORES 14 ESTATE PLANNING 14 Who's Who at BucksRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioAnn Carrns is a freelance reporter based in Fayetteville, Ark.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Site Map © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Terms of Sale Corrections RSS Help Contact Us Work for Us Advertise if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');Technology to reduce drowsy driving, preparing your pet for air travel, a bad year for car bargains and other consumer-focused news from The New York Times.
Ron Lieber writes the Your Money column, which appears in The Times on Saturdays.
Tara Siegel Bernard is a personal finance reporter for The Times.
Ann Carrns is a freelance reporter based in Fayetteville, Ark.
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