So gold is on a tear, up 50% this year, and seems to be the investing flavor of the month.

 

I’m not a gold investor. I have a gold coin somewhere. It sits there doing absolutely nothing, which is exactly the problem.

 

 

Warren Buffett explained gold better than anyone. 

 

Imagine, he said, you could buy all the gold in the world. You'd have a cube of metal about 67 feet on each side. You could sit on it, polish it, show it off to your friends. But that's it. All you could do is wait for someone else to come along and offer you more money for your shiny gold cube.

 

For that same amount of money, Buffett pointed out, you could buy all the farmland in America. Every single acre. Each year, that land would produce billions of dollars worth of food, and that number would keep growing. Better seeds, better equipment, better techniques.

 

The farms actually do something. They produce wealth, not just store it. Way better deal.

 

 

Sure, people make money buying gold. And crypto. And meme stocks. But here's the thing nobody talks about: speculation is a great way to get rich short term, but it's a terrible long-term strategy.

 

Why? Because you have to be right about everything. You have to be right about:

That's a lot of things to be right about. And you have to nail them all, over and over again.

 

That's why it's important to know, when “investing,” what you're actually doing.

 

Teach your kids the difference between each of these things:

 

Betting: You put money on one outcome. If you're wrong, you lose. If you're right, you win. It's quick and binary. Knowledge helps, but luck matters more.

 

Gambling: The house creates games where the odds favor them. You might win tonight, but play long enough and the math catches up. You’re buying entertainment.

 

Speculating: You buy something hoping someone else will pay more later. Could be gold, could be baseball cards, could be vacant land. You're not buying income, you're buying hope.

 

Investing: You buy something that makes money. A business, a rental property, a farm. It keeps producing cash, even if nobody wants to buy it from you. This is how wealth actually builds.

 

 

People often ask me: "Is buying land real estate investing?"

 

Not unless someone's paying you rent. Without income, you're just speculating that someone will want your dirt more than you do someday.

 

When you can't tell the difference between investing and speculating, you're probably speculating.

 

Here's why I invest in real estate. I can control my investments (drive by, improve them, add value). They have utility (housing, which someone pays me for). And I never have to sell to take a profit, unlike gold. But if I hold long enough, appreciation is guaranteed.

 

There has never been a 10-year period since the Depression when U.S. home prices dropped. Not during the '70s inflation. Not even if you bought at the peak before 2008. Never.

 

That's not speculation. That's backing the most consistent trend in American economic history.

 

Yes, your friend made a fortune on gold (or Bitcoin, or GameStop ). But for every winner you hear about, there are dozens of quiet losers. 

 

 

Speculation promises to turn your thousands into millions overnight.

 

Investing promises to turn your thousands into millions. It just might take decades.

 

Fast nickel, or slow dime? That’s speculation vs. investing.