3 Reasons Not To Invest in Gold

Gold sounds awesome, doesn’t it? Even just the word itself, how great does it sound? 

Good gosh. Gold rings, watches, necklaces, pendants, and the list goes on. Gold just sounds so fancy, right?

Well, we hate to burst the golden bubble that you’re in right now thinking about how cool and awesome and fancy and expensive and prestigious gold is, but we’re here to tell you that you need to look away when it comes to investing in this beautiful metal.

As wonderful as the idea of gold is – and please, don't let us stop you from going out and buying a fancy gold watch if that’s what you desire – when it comes to learning how to invest and what to invest your money in if you want to see it grow, look somewhere else. 

Gold as an investment is a stagnant, fleeting, and old-school area to put your money that would not make for an intelligent investment in 2021. 

Here are our three reasons why you should not invest in gold. 

1. Lacking Modern Interest Among Investors

In a lot of ways, successful investing and the performance of a particular investment are tied directly to the general population’s interest in or demand for said investment. We’ll talk a bit more about where more people are actually putting their money later in this blog but let’s put it this way: gold is for generations past.

Not a lot of young people (aka the new crop of investors in 2021 and going forward) are all that interested in gold. They, as do all of us, know that gold obviously has some growth potential but it is incremental compared to other places you can put your money – ultimately making gold a poor investment today. 

 2. Poor Long-Term Returns

“From 1972 through 2013, common stocks returned 14.68 percent in falling rate environments while gold futures returned 7.85 percent. In rising rate environments, stocks returned 8.47 percent while gold only returned 4.86 percent. When rates were flat, stocks provided a gain of 10.61 percent and gold returned 8.61 percent” 

Since the first full year the dollar was not tied to a set price of gold, the precious metal that catches so many of our eyes in watches, rings and other fancy items has been an underperforming investment. It’s that simple. Gold may grow, but it will not produce results that compare to other investments such as stocks. If you’re going to learn how to invest your hard-earned money, why would you invest in something good like gold when you can instead invest in something GREAT?

3. Better Places To Put Your Money – The Stock Market

We’ve touched on this a bit already but there are simply just better ways to invest your money than gold. 

Exhibit A, B, C and D: The Stock Market

Why?

The stock market, while admittedly volatile just like most investment opportunities, provides a pristine opportunity for growth and a much greater chance to make more out of your money compared to gold. 

Provided you invest in the right stocks, the return on investment can be astronomical. Some companies you are able to invest in provide dividends to stockholders. Some companies provide voting shares and with that, the ability to influence the company. Some investments, while not providing either of the two aforementioned benefits, simply grow so quickly that you may see a 20%+ increase in mere days, weeks or months, while we would be lucky to see such growth in gold over a year. 

All told, we truly believe that it would be against your better judgement to finish reading this post and go straight to investing in gold. Here’s the thing though. If you’ve gotten this far, you’re probably thinking: “if gold is the “bad”, where can I go to learn the “good” when it comes to investing?

Here at Explorer Hop, we’ve got plenty of programs to teach adults how to trade and how to understand things like mutual funds, but even better yet, we want to help you pass along the knowledge we’ve provided to the next generation of young investors with Learn to Invest – our program that teaches children in grades 7 through 11 all about the stock market, mutual funds, taxes and more.