A few years ago, we had a client with a sizable amount of gold coins stashed in a safe deposit bank.  Now with gold hitting all-time highs this year, clients and acquaintances are asking if we think gold should be a part of their portfolios.  I'll be blunt: if you think the world is going to hell in a handbasket, spend your money "prepping" rather than buying gold. If you're right about the end of civilization, you'll be glad you took my advice.  If you're wrong, you can probably still sell your guns and ammo for more than you paid for them. (So it's sort of like buying gold but with more usefulness.) 

People flock to gold and other precious metals when they're feeling particularly uneasy about the future.  This week I got a flyer in the mail offering to buy my "unused" gold and get a "bonus" for selling them at least $500 of my stuff.  Why on earth is someone spending the money to send me a flyer to offer to buy my gold? Because they think they can sell it to someone else at a profit.  

Nothing wrong with that, but gold is selling for close to its highest price in a decade.  Gold has risen from around $300/oz in 2000 to around $1,900/oz today. That's around a 10% annual increase for two decades.  To put that in perspective, the companies that make up the S&P 500 have returned an average of around 10% per year since the 1920s.  

Do we really think a lump of metal has delivered more value to our economy than actual companies that make things and improve our lives? I don't buy it (no pun intended). 

If you take a pass on gold, you're not going to be missing out.

We have an incredibly complex and resilient economy. Political divisions aside, every day, tens of millions of Americans go to work - some by car, other by train, fewer by air and a lot more by shuffling to the office in their slippers.  Working together, each of us plays a role in the labyrinth of buying, selling, producing, consuming goods and services.  

This isn't likely to stop regardless of who is in the White House, in Congress or in the Court. In a free-market economy, success comes from adapting to the environment and meeting the needs of fellow Americans with the right goods and services. Gold can't do that; all it can do is sit. 

If you're reading this, know that you're one of the adaptable ones. You're one of the reasons our economy will keep moving. You're one of the Americans keeping the sky from falling and you have reason to be optimistic about the future.  (Of course, if you want to, buy gold. Just don't expect it to calm your nerves or improve your life.)

Cheers,

We're not Brokers; We're Fixers!  

Business-owner Strategies Group, LLC is a North Carolina Registered Investment Adviser and Licensed Insurance Agency d/b/a BSG Advisers.  BSG Advisers offers clients financial planning, investment advice and insurance.  BSG Advisers does not provide tax or legal services.