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Gold-What is it good for?

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brellis1vt:
Through the years I have always heard that you should hold a certain percentage of your net worth in gold in case something awful happens.  I bought some via ETF last year just due to the unknowns of COVID but am rethinking the value of owning it.  I always maintain a 12-month emergency fund so I am covered in most ways.  It can help mitigate risk to the dollar but so can global diversification.  I don’t believe it will produce the returns of the stock market but curious if others know of a good reason to keep.

celerystalks:
Gold is portable wealth. It appreciates slowly and keeps pace with inflation. Physical gold plus secrecy produces some interesting results.

Here are just some of the things that might go through someone’s head. Not saying that some aren’t gray areas. But still ideas nonetheless..

What happens if the dollar is severely devalued through government spending?
What happens if someone wants to give someone a birth/baptism gift that they can benefit from when older as an adult (savings bonds have effectively been killed)?
What happens if all of someone’s accounts get frozen and credit cards closed?
What happens if someone has a chance of going through a bitter divorce where the ex stands to get most of the paper/titled wealth?
What happens if someone wants to start a treasure hunt?
What happens if someone wants to pass familial wealth to another generation, but doesn’t want to do a lot of paperwork that others could see?


Sure. Physical cash could work in some of these instances. But not all. And cash has a way of being spent since there is no obstacle to its use. Gold on OTOH requires being sold first. So folks who have it find they haven’t dipped into it without really thinking about it first..

BicycleB:
Existing thread: https://forum.mrmoneymustache.com/investor-alley/precious-metals/

Two other angles from a portfolio perspective:

-portfoliocharts.com has examples and calculators
https://portfoliocharts.com/

-gold was an ordinarily effective component of the diversified portfolios in the Idiots vs Gurus thread that got very good results
https://forum.mrmoneymustache.com/investor-alley/portfolio-design-idiots-v-gurus/

ETA: As the "shiny" poster below points out, it's good for jewelry. As I understand it, there's more gold in jewelry than bank vaults, more in bank vaults than industry.
https://www.usgs.gov/faqs/how-much-gold-has-been-found-world?qt-news_science_products=0#qt-news_science_products
https://www.usgs.gov/centers/nmic/gold-statistics-and-information

https://www.bbc.com/news/magazine-21969100 (articles says gold is being consumed for the first time due to use in consumer products that get thrown away; previously it was hoarded/recycled)

Perhaps its most powerful use is to symbolize caring, uniting two people in marriage or expressing human connection?

ericrugiero:
On one hand, gold is a terrible investment.  It's value fluctuates but doesn't increase rapidly.  You would be much better putting money in the stock market for growth.  For emergency use, it's tough to spend in an emergency. 

On the other hand, it's the oldest way to store wealth in the world.  Gold has been used as money for many thousands of years.  It will almost certainly be worth something long after the US dollar (or any other currency you can name) is worthless. 

I have a small percentage of my wealth in gold.  At this point, I would have been much better off to invest that money in index funds.  But, I don't plan to sell it any time soon. 

RWD:
https://www.youtube.com/watch?v=gKAM1NfMXY8

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