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New shows, new music, new movies. Keeping up with pop
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culture sometimes feels like a full time job. Thankfully, over
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at pop Culture Happy Hour, it's literally our job. We
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break down what's actually worth watching, listening to and pretending
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you already knew about. So the next time someone says
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did you see that, you can say yeah, obviously follow
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NPR's Pop Culture Happy Hour. Wherever you get your podcasts.
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You're listening to Life Kid from NPR. Hey, it's maryel
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I lost a gold hoopering the other day, one of
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several pieces of jewelry that I have recently disappeared. And
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my first thought was, I clearly cannot be trusted with
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real gold jewelry, because have you seen the price of
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gold these days?
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Gold has just been on this record breaking tear and
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now the price has been going up for a few years,
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but last year was the best year for gold since
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nineteen seventy nine.
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This is Maria Aspin. She's a finance correspondent at NPR,
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and she says gold tends to be seen as a
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safe haven investment when things are looking scary in the world.
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It's sometimes called part of the fear trade. So in
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the past year, we've had a trade war, we've had
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a real war in Iran, We've had an energy crisis
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where we've seen concerns about inflations still not being under control,
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and gold is often seen as a hedge against all
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of that.
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So maybe you're wondering should I get in on this
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if gold is doing so well? And I have heard
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a lot of ads on YouTube and podcasts suggesting exactly that.
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On this episode of Life Get I talked to Maria
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about this will go over what it actually means to
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buy gold. You don't necessarily have to own the physical stuff,
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whether it's a good long term investment because the price
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is super volatile, and how it's returns compared to the
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stock market over time. Maria, you just shared some of
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the reasons that people are buying gold right now. I
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think in a lot of cultures too, that's just the
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thing you do. You buy someone gold for their birthday
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or when they graduate, and it's seen as more reliable
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than the currency in some countries. So I wonder is
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there a currency element in the US as well now,
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where people are like, the dollar's value is dropping, so
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we're now more bullish on gold.
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Yeah, And actually it's not even the US. It's central
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banks around the world have traditionally held a lot of
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their reserves in US dollars, and last year, especially between
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President Trump slapping a whole bunch of tariffs on almost
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everything the US imports, as well as some of his
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threats to the Federal Reserve's independence, all of that yielded
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what was known as a sell America trade. In other words,
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like countries around the world, governments around the world started
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worrying about the safety and security of the US government
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and the US system and started rethinking whether they wanted
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to hold as many of their reserves in US dollars,
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And we saw many central banks sell some dollars and
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swap to gold. So that contributed to driving the price
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of gold up. And then everyone sees the price of
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gold goes up, which makes you and me sit down
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and be like, oh, gold is really going up? Should
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I invest in it? Maybe it's a good investment. I
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don't want to be left behind.
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Right when we say gold prices are going up, what
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are we actually looking at. Is this the price of
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an ounce of physical gold?
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Yes, it's the price of an ounce of physical gold,
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But there are a couple of different prices there's the
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spot price, which is what it is to buy gold
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on the spot, meaning right now. Or there are gold futures,
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which is like any other future, a contract that an
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investor enters into to buy gold when it hits a
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certain price now. Spot gold can often influence
Load full transcript
the price
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of futures, and they tend to be connected. Sometimes there's
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a big difference, but often not. Gold jewelry has long
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been a way of buying gold, a way of storing
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value and giving people gifts or making sure that your
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loved ones has something that has an inherent worth in
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and of itself. Right, we could go to Costco today
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and buy some gold.
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So when we're buying gold, it could be literal gold bars,
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but there are also lots of other ways to buy
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yess And frankly, when we're talking about should you buy
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gold as part of your broader investment portfolio, we're probably
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talking about some of the less literal types of gold.
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So you could buy into their exchange traded funds or
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ETFs that are pegged to the price of gold. You
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could also buy into companies or funds backed by the
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stock of companies that are like in the gold industry,
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so like mining companies, I mean literally the companies selling
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the modern day equivalent of picks and shovels.
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Why would you choose one of these options over another
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if you were going to buy gold.
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So jokes about costco aside, there are things you have
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to think about with each type of investing in gold
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that you're considering, and let's say investing in precious metals
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more generally, if you're buying the physical stuff, you have
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to think about where are you going to store it?
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Do you have enough space, is it secure? Are you
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worried about like home invasions or robberies, or like do
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you have insurance? There are all of these downsides of
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buying the physical valuable thing and keeping it somewhere where
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you have to spend time, money, or find space to
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store it. As a broader investment class, if you're buying
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anything that's like not a mining company, but pegged to
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the price of gold, like a gold back DTF. Gold
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doesn't pay dividends or interest in the same way that
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stocks or bronds do. So
you're buying something or you're
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buying a fund peg to something, and you basically have
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to hold it until the price goes up and you
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sell it at the right time and reap the profit.
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And this is something that has made like Warren Buffett,
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the legendary investor, say yeah, gold isn't really worth it
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because you could buy a lot of other types of
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investments like company stocks or even land, and they will
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generate actual income and revenue and pay dividends. If you're
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buying a share of a company, you are in theory
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like watching that company make more money and grow in
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value over time, and you're benefiting from that gold. It's
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more about holding on to it and waiting to time
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your sale of it correctly.
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Whereas you'd get interest if you invest in bonds, and
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you get dividends if you invest in stocks with gold,
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you wouldn't get either of those right.
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So I talked about this with Katie Klingonsmith. She's the
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chief investment strategists for the financial advisor Edelmann Financial Engines.
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We look to include investments that make returns over time.
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And when what invests in gold, what is simply hoping
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that the price of gold goes up. When what invests
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in a company, what is hoping that that company grows
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over time, that it actually is producing things, making earnings
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reinvesting in the company.
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So she doesn't automatically include gold or other precious metals
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in the investment portfolios that she creates for her clients.
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Okay, so it sounds like the point here is that
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when you buy stock in a company, that stock price
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is supposed to go up and down based on the
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company's fundamentals, like its product, it's profits, it's potential.
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Yes, And whereas as we've seen with the super volatile
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price of gold in the past year and frankly the
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volatile price of gold over time, yes it's shiny, Yes,
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it's solid. It's something physical that a
lot of cultures
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you know, have decided has intereent value. But it doesn't
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do anything to actually make the price go up. It's
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just kind of what external factors are making other investors
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decide that it's more expensive. And as we've seen in
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the past year, there's kind of an element of like
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fomo right now, you know, the price of gold has
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been going up, So should I buy gold because I
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don't want to miss out on this investment that's going
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up and up. One investor I talked to called it
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the momentum trade, and you know that comes back to
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central banks are buying more into gold, so retail investors
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see the price go up and they buy more into gold.
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And that's all great until something happens to kind of
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snap the spell, and we're all like, oh wait, maybe
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we are over exposed to gold right now?
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How does gold compare as an investment over time? To say,
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investing in an S and P five hundred index fund over.
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The long haul, those stock market outperforms gold. You know,
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there have been years when gold has outperformed the stock market,
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but over like the last thirty years, the S and
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P five hundred has returned about ten percent and gold
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has returned less than that. It's over the last thirty
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years or so, gold has returned more along lines of
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eight percent.
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Okay, it seems like, particularly in this moment, it would
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have been a great time to buy gold a year ago,
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with the benefit of hindsight, of course, but now that
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the price is so high, as you mentioned, if you
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did want to buy gold, would now really be the time.
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Personally, I'm not sure it would be. But you know,
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I'm not a certified financial planner, but I've talked about
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it with certified financial planners like Lee Baker. He is
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the founder and CEO of Clari's Financial Advisors in Atlanta.
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There tends to be, in my opinion, some over hyping
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of gold in that now it's sort of like, hey,
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gold doubles, triples and blah blahlah blah blah, and there
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tends to be a push where people are jold coerced
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led into what I would say is an overly aggressive
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allocation of goal because it's doing well. Yet we know
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that looking in the rear view mirror to set your
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priorities and how you want to allocate your assets is
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a bad thing to do.
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I think that's just so important for any kind of investment, Like,
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don't buy into something just because you're looking into the
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rear view mirror and it's done really well in the past.
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If you did decide that you wanted to have some
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gold in your portfolio to just to try it out,
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just because you think the price is going to continue
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to go up, what percentage of your investments might a
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financial advisor suggest that you shift from stocks or bonds
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to gold.
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So I will start by telling you that the advice
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out there is all over the place. The hedge fund
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billionaire Ray Daallyo, who founded Bridgewater associates. He's out there
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saying you should put as much as fifteen percent of
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your portfolio in gold. Now, that is super aggressive compared
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to what most other advice is. Some of the financial
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advisors I've talked to, like Katie, they say maybe none.
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You know, they do not automatically include any gold in
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the portfolios that they create for clients. And then Lee,
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he's kind of middle of the road. As you heard.
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He thinks that gold is pretty overhyped these days. But
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he has advised clients to buy into commodities as part
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of a more diversified portfolio. And this is his general advice.
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At five percent, I start to get a little nervous
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because something can go wrong, and it can go wrong
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at the wrong time and have an oversized impact on
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your portfolio.
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So less than five percent his advice is less than
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five percent, And I
should point out that's again his
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general advice for investing in any one thing, whether it's gold,
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whether it's one particular stock. So his advice is five
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percent is starting to be too much.
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What about precious metals in general, Like, if you're trying
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to diversify your portfolio, I wonder does it also make
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sense to invest in silver or copper.
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Yeah, I mean, and we've seen sort of silver and
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copper kind of mimic what's going on with gold. So
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silver and copper have hit record highs also, but there's
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so much less expensive, like silver is trading at eighty
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dollars per ounce versus forty five hundred dollars per ounce
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for gold. That said, there are some more use cases
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for silver and copper in more industrial purposes than we
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see for gold. Gold can be used in some electronics,
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and obviously it's used for jewelry, but with silver and copper,
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they're used in construction and computer chips and solar panels,
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so there's like real world demand and applications for them
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beyond what there is for gold. Again, and most of
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the financial advisors I talked to say, if you're looking
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to get into gold, maybe look for a broader precious
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metals or commodities fund that gives you some exposure but
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also hedges your risk.
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A little bit. Maria Aspin, thank you so much, Thank
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you so much, pleasure to join you all. Right, time
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for a recap. The price of gold has skyrocketed over
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the past year, so last year would have been a
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great time to buy, but now not necessarily looking in
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the rear view mirror to make investment choices is not
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the best strategy. Also, over the long term, the S
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and P five hundred outperforms gold. But if you'd like
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to add some to your portfolio to diversify a bit
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and maybe take advantage of any further price increases, Maria's
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source said to aim for less than five percent. You
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can buy gold by the bar. You can invest in
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gold futures, though that's generally something only professional investors do.
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You can also invest a fund that tracks the price
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of gold, and you can invest in companies that are
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involved in the gold economy, like gold miners or retailers. Also,
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if you want to diversify in general, maybe consider other
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precious metals in addition to gold, like silver and copper.
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The thing about those is they are also used in industry,
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so their value is pegged in part to their usefulness,
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as opposed to gold, which runs largely on vibes. All right,
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that's our show. A reminder, by the way, you can
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sign up for life Kit Plus to support our work
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at NPR and get curated playlists on popular Life Kit topics.
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Start listening today. At plus dot NPR dot org slash Lifekit.
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This episode of Life Kit was produced by Margaret Serino.
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Our digital editor is Malica garib and our visuals editor
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is CJ.
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Riklon.
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Megan Kin is our senior supervising editor, and Beth Donovan is.
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Our executive producer.
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Our production team also includes Andy Tagle, Clairemriy Schneider, and
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Sylvie Douglas. Engineering support comes from You Aisha Highness, with
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fact checking by Tyler Jones. I'm Mariel Segarra. Thanks for listening.