My sympathies are with all those who followed the advice of Glenn Beck, Michael Savage, et al, and bought gold at the beginning of 2013. If you are one of these unfortunate souls, you know better than anyone that you lost 30% of your hard earned money in the gold market, which you were told investing in would prevent you from losing your hard earned money in the stock market.
A year ago, when gold was approximately $1800 an ounce, the radio gold hucksters and others were intimating that the precious metal was going to reach three, four, or even five thousand dollars an ounce. Instead, gold plummeted to its current price of just over $1200 an ounce. Mr. Beck and others were selling gold as a means for folks to increase their wealth. Now that gold has proven a bust as an investment, Glen has changed his sales pitch to push gold as a tangible asset worth having in some sort of Madd Maxx scenario.
Gold reached its all time high in the 1980s, and in order for it to achieve the same inflation-adjusted level today, it would have to reach $2400 an ounce. A real bummer for those who bought at the 1980s high and have held it for 35 years. Even those who bought gold at the market low in March 2009 and are still holding it, have only realized a thirty percent return on their investment since, while stocks have appreciated 150% during the same period. And although the case can be sufficiently made that stocks are riding high on the wave of Federal Reserve stimulus in the form of its bond-buying program known as quantitative easing, the Fed's easy money policy has also driven up the price of commodities, including gold. Just the opposite of what should happen, but more proof of the havoc caused by government interference in the free market.
Part of the goldies sales pitch for their favorite precious metal is to convince an uninformed public of the oft repeated myth that the stock market is a zero sum game. In other words, if someone makes money in the market, someone else must necessarily lose that same amount. The ignorant who believe this think that the pie is only so big and never grows, this being the case, the stock market would be valued the same over time and never change. But one does not have to lose money for someone else to make money. Consider the following example to illustrate my point. I purchase shares of stock in company X for $10 and sell them for $15. The buyer of my shares hold them until they appreciate to $20 and then sells them. We have both made money on the same shares. A real life example is Apple. In the late 1990s, Apple stock was a couple of dollars a share, today it is $550. Millions of people made money on Apple shares over the last 15 years. The pie grew!
I do acknowledge that precious metals like gold can add value to a portfolio, but they must be carefully managed because of their volatility. Buying any precious metal and holding it for long periods of time is not a wise investment strategy. And as for the end-of-the-world scenario about which Glen Beck has fantasized, you can keep your gold. I would much rather have guns, ammo, and fuel.