Let’s talk about gold again.  With commodity prices rising (anybody notice how much a gallon of milk costs – about the same as a gallon of gas at this point), talk again has turned to gold.  And with bullion trading above $1400, I thought it might be time to discuss it a little again.

I have to ask… GOLD?!  Seriously?

Gold is seen as a great place of safety for people to allocate their wealth.  But I have to question why.

For one thing, gold isn’t nearly as popular as a “shiny object”.  It also has lost it’s appeal as something attractive to look at.  People find it gaudy and showy.

My thought is this:  If the world economies collapsed (a highly unlikely event in my opinion), and you HAD a lot of gold, what would it REALLY be worth?

Or rather, what would you trade it for?  If I was a farmer and someone wanted to buy my crops with some gold, I’d tell him to go fly a kite.  Now, if he had some gas, or some pesticide, or some high speed internet, I’d be all over it.

Resources and assets are priced according to what people will pay for them.  Currently, people will pay quite a bit for gold.  My guess is a lot of this is big investors riding the fear of smaller investors.

So here’s a little comment I thought I might make.  If you TRULY think that the world markets will collapse, you should NOT be buying gold.  Because, what are you going to do with it?

Gold can be a great addition to a portfolio.  But it is not the fix to volatility.