Q:  The price of gold has recently topped $1,400 an ounce, providing eye-popping returns to investors.  It seems we’ve missed out; should we reconsider whether gold belongs in my portfolio?

A:  There is no denying the rapid ascent in the price of gold over the past few years.



We do not, however, view gold as an investment. Gold does not provide the inherent return stream (like interest income and/or cash flow) which makes core asset classes such as stocks, bonds and real estate attractive for long-term investment.  Returns from gold, rather, are speculative:  they come from the difference in the purchase price and what someone is willing to pay today.  That’s not to say we don’t benefit from increases in the price of gold.

After all, a diversified index fund portfolio holds virtually every publicly-traded company that mines or processes the yellow metal.