Passing Up Precious Metals

Over the millennia, gold and silver have served as mediums of exchange or
currency because they have intrinsic value and can’t be debased the way
that paper currencies can (by printing more money). These precious metals
are used in jewelry and manufacturing.
As investments, gold and silver perform well during bouts of inflation. For
example, from 1972 to 1980, when inflation zoomed into the double-digit range
in the United States and stocks and bonds went into the tank, gold and silver
prices skyrocketed more than 500 percent. With precious metals pricing zooming upward again since 2000, some have feared the return of inflation.
Over the long term, precious metals are lousy investments. They don’t pay
any dividends, and their price increases may, at best, just keep up with, but
not ahead of, increases in the cost of living. Although investing in precious
metals is better than keeping cash in a piggy bank or stuffing it in a mattress,
the long-term investment returns aren’t nearly as good as bonds, stocks, and
real estate.
One way to earn better long-term returns is to invest in a mutual fund containing the stocks of gold and precious metals companies