My Views on Gold: Setting the Record Straight

Gold prices are down almost 50% from their peak a few years ago and are now plumbing the depths of levels we haven’t seen since 2010.

It’s been a slow-motion crash that’s engendered more defensive cognitive dissonance than any asset crash I’ve ever seen. Even the real estate and dot com people admitted when their comeuppance had come. The gold people suffer from no such humility. Instead, they turn personal and nasty toward anyone who points at the scoreboard. They immerse themselves in manipulation and collusion fantasies. The wronger they become, the more ardently they believe they’re right.

As a student of investment behavior, I’m learning a lot from this. It’s a fascinating phenomenon to watch play out. But the fact remains that I don’t have a dog in this fight. I am neither long nor short gold, nor do I intend to be.

A lot of people are making the assumption that I’m either bearish on gold or that I think it has much lower to go. They’re extrapolating my sarcasm about the supposed benefits of gold into a trading bias that I simply don’t have. So today, I’ll set the record straight once and for all: I am a gold agnostic. I don’t care about where it goes and what it does. I don’t like it, I don’t hate it – I simply don’t care about it. This is what sets agnosticism apart from atheism by the way: apathy.

One thing I do have a strong opinion on is whether or not it belongs in an investment portfolio. My opinion is that it does not. It’s utterly pointless as an investment in that there is no conceivable way to value it and it doesn’t do what its most vocal supporters claim it does. Stocks and real estate have historically been a better, more productive hedge against inflation. These are the facts.

And if you think your shares of a paper ETF backed by gold are going to protect you in the event of a societal collapse, I have even worse news for you: the cannibals won’t be impressed by your cost basis in GLD. Taken a step further, an investment in gold mining stocks is even more counterproductive. It’s like gaining exposure to the metal, but net of the costs and expense of running a public company, including bonuses, salaries, equipment, risks of geopolitical interference and worker strikes etc. All the risk of owning any company’s stock, but in this case, the additional risk of a fear/greed cycle in a boom-and-bust commodity that no one can control.

My core view on gold is that, at best, it can be a good trade for those on the right side of a trend. And, at worst, it’s a commodity speculation that certain people have developed a quasi-religious fervor around owing to either their political biases or their inherent gullibility. I understand why reasonable people want to casually include it in their portfolios, even though I think they’re wrong (see A Quick Note on Portfolio Construction and Gold). I’m wrong about plenty of stuff too. I have friends who believe in gold as a portfolio diversifier and they make fair points, mostly revolving around gold’s outperformance during the aught’s decade of flat stock returns. But they’re not religious about it, they’re not what I’d call obsessive.

As for the gold obsessives, I’ll just say that they typically don’t like me. I believe that most stuff tends to work out in the end and that the American experiment is worth betting on. Especially during those moments when it looks most dire (see Optimism as a Default Setting). This is not to say that I’m not preparing myself for events to turn out badly – it’s just that I don’t envision them staying that way forever.

History is on my side, not theirs. We have a $19 trillion stock market and a $17 trillion economy and that didn’t happen overnight.

Gold obsessives are not optimists by nature, they are skeptics. Which is perfectly ok, except they never seem to be skeptics about the one thing that matters – the claims being made about the metal they’ve fallen in love with. Becoming a “gold guy” – and yes they are almost all men – is about more than just the pursuit of investment returns. It’s a posturing or a signaling of sorts that you are not okay with the direction things are heading. It’s a flag waving exercise in the guise of a “sound money” investment policy.

In my experience, there’s a very high correlation between gold obsessives and conspiracy theorists. Or between gold obsessives and Glennnn Beck fans who think America’s best days ended in 1959. Or between gold obsessives and people who generally abhor popular culture and societal progress.

The thing is, they could actually be right that things can only get worse. I don’t think they are, but the possibility exists.

Maybe, just maybe, the world is about to end – brought on by the thawing of social rigidity, the dissipation of 20th century status quo morality and the interference in so-called “free markets” on the part of governments and banks. In this case, I’ll let Charlie Munger do the talking for me:

“I don’t have the slightest interest in gold. I like understanding what works and what doesn’t in human systems. To me that’s not optional; that’s a moral obligation. If you’re capable of understanding the world, you have a moral obligation to become rational. And I don’t see how you become rational hoarding gold. Even if it works, you’re a jerk.”

Gold could be on the verge of a major comeback, vindicating the faithful and bailing out the people who’ve wagered their retirement hopes on it. This wouldn’t change any of views from a portfolio perspective. To me, it can only ever be a trade. One of my proudest accomplishments as a financial advisor over the last few years has been the rescue and deprogramming of dozens of investors who had been previously lured into all manner of junior miner promotions and dubious precious metals funds.

And for those who’ll point to this post as evidence that “the bottom is at hand” or say I’m a johnny-come-lately to gold agnosticism, I’ll point to some of the more important things I’ve written on the topic going back to 2011:


BREAK-IN: The Goldbug Rapture Has Begun! (TRB)

Gold: This is What an Ex-Momentum Trade Looks Like (TRB)

A quick note on portfolio construction and gold (TRB)

Deep Thoughts with Josh Brown: Gold Miner Dividends (TRB)

Memo to David Einhorn re: Gold Miner Suckitude (TRB)

Gold Miner Update: Yes, they still suck. (TRB)

Things I Learned at Gold-Buy-GoldWest (TRB)

God is Making Gold Crash to Test Your Faith (TRB)

Being an agnostic means I neither root for nor against gold’s price. I simply avoid it entirely, confident that there are better hedging options for whatever ‘flation may come down the pike next. It’s not a controversial stance. To me, it’s a logical one.


This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. digital marketing agency london commented on Oct 12

    … [Trackback]

    […] Info to that Topic: […]

  2. Harold Jahn Edmonton commented on Nov 04

    … [Trackback]

    […] Info to that Topic: […]

  3. 어른아이닷컴 commented on Nov 09

    … [Trackback]

    […] Info to that Topic: […]

  4. tangerine bank account commented on Nov 14

    … [Trackback]

    […] There you will find 14268 more Information to that Topic: […]

  5. td bank login commented on Nov 17

    … [Trackback]

    […] Find More on on that Topic: […]

  6. Software Testing Outsourcing commented on Jan 15

    … [Trackback]

    […] There you will find 7728 additional Information on that Topic: […]

  7. DevOps automation consulting commented on Feb 05

    … [Trackback]

    […] Find More Info here to that Topic: […]