Don't invest in gold
🔸 Plus: Cloudflare staffer who got fired on TikTok has no regrets 🔸 Taylor Swift buys carbon credits to offset her private jet 🔸 Ex-CEO of Abercrombie & Fitch suspected of sex trafficking 🔸
Hello! Here’s today’s 2-minute guide to demystifying money and making you richer
We bust the myths around investing in gold.
Cloudflare employee who videoed her firing for TikTok has no regrets.
Taylor Swift buys carbon credits to offset the damage done by her private jet.
The ex-CEO of Abercrombie & Fitch is being investigated for allegedly running a sex-trafficking operation.
House prices fell but rents went up.
JP Morgan Chase is targeted by hackers 45 billion times per day.
UK inflation is being driven by booze and cigs.
75% of millionaires believe they should be taxed more heavily.
The new Bitcoin ETFs took in $871 million in their first three days.
Remote work doesn’t reduce productivity.
Yesterday’s markets
S&P 500: 4,728.45 ⬇️ 0.79%, ⬇️ 0.31% YTD
FTSE 100: 7,446.29 ⬇️ 1.48%, ⬇️ 3.56% YTD
Bitcoin: $42,314.70 ⬇️ 1.89%, ⬆️ 4.20% YTD
GBP to USD: $1.2679 ⬇️ 0.37% YTD
GBP to EUR: €1.1668 ⬆️ 1.18% YTD
Why you should not invest in gold
We’ve all been there. You’re vegging out in front of late-night TV or doomscrolling through YouTube when, suddenly, a very enthusiastic person appears on the screen to insist that you really should be investing gold.
Sometimes it’s Nigel Farage — the Brexit politician and TV presenter who has a side-gig flogging gold investments.
For about 5 minutes, saving some of your money in gold feels like it might be a good idea. After all, it’s gold! It’s literally always valuable! They’re not making any more of it!
And because it has a reputation as a “safe haven”, the price of gold often goes up when Bad Things Happen.
Gold has a special, weird hold on the imagination, in a way other investments do not. You can get a lot of attention at parties by casually telling people “I made a lot of money by investing in gold!” It doesn’t have quite the same effect if you’re talking about tech stocks.
But there are good reasons why you, a normal person who just wants financial security and independence, should stay the heck away from gold.
First, do NOT EVER buy actual gold
This is a good way to make yourself the target of a robbery. You can buy gold bullion from the Royal Mint starting at just £75 but as soon as word gets out that you have ingots lying the your house it’s a matter of time before someone breaks in. Stolen gold is easy to sell at full price — you just melt it or shave off the hallmark and it’s untraceable. Criminals love physical gold.
Only stupid people keep actual gold at home.
It’s easier and safer to invest in a fund that tracks the price of gold. You can do that online in your ISA account, in the same way you can buy stocks of mutual funds. You can sell a gold fund in seconds online, and you don’t have to carry the crime risk or buy a safe.
The irony of gold — it won’t make you rich
But the real problem with gold is that — ironically — it’s not going to make you rich. Or at least, it’s not going to make you as rich as a lazy person who bought a broad stock fund like an S&P 500 ETF and just waited for the markets to do their thing.
Let’s go to the charts!
Here’s the iShares Gold Trust fund (which broadly tracks the price of gold) compared to the S&P 500 (which includes the biggest blue-chip global companies registered in the US), over the last five years.
You can see why some people want to balance their portfolios with a bit of gold. To be as charitable as possible, the price does seem to go up when the rest of the market is going down. And anyone who held gold for the last five years would have made a 55% return. Not bad.
But now look at what happened to people who put their money in big corporate stocks and did nothing else: their money went up 77%. That’s a 22-point better performance than gold.
Crucially, after the first year stocks never really sunk below the performance of gold. Even on their worst days, in late 2022, people holding stocks were ahead of the people holding gold.
And that’s just the last five years.
Zoom out 20 years and gold’s underperformance vs stocks becomes crushingly obvious
The bad news about gold
There are good reasons why gold underperforms. Unlike stocks, gold doesn’t pay interest or dividends. Investors can’t get paid for investing, so they’re less enthusiastic than the paid personalities on YouTube and TV.
And then there is the small complication of the miners — the supply of gold is controlled by mining companies whose struggles to get the stuff out of the ground can greatly affect the price. So sometimes, you’re not actually invested in the “safety” of a precious metal, you’re actually speculating on the fortunes of some corporate geologist test-drilling in the Australian Outback.
If you want to know more about why lazy investors always seem to get so lucky, read this Moneyin2 post for more details.
And for dessert …
A Cloudflare employee who videoed her firing and then put it on TikTok has no regrets. Brittany Pietsch (above) wrote on LinkedIn: “I’ll never be able to wrap my mind around it. We as employees are expected to give 2 weeks notice and yet we don’t deserve even a sliver of respect when the roles are reversed? … If I don’t stand up for myself… who will?” This video is a must-see. (Don't do this in real life, BTW — not a good career tactic!)
Taylor Swift buys carbon credits to offset the damage her private jet does to the environment. Of course, offsets don’t reduce your CO2 output. They merely neutralise it.
The ex-CEO of Abercrombie & Fitch is being investigated by the FBI for allegedly running a sex-trafficking operation. Yikes.
House prices fell but rental prices went up. Property values declined 2.1%, according to the latest numbers, as rents went up 6.2%. Why? High interest rates put people off buying houses, so house prices fell, but all those people who aren’t buying houses need somewhere else to live — putting up rents.
JP Morgan Chase is targeted by hackers 45 billion times per day. This is why changing your password and adding two-factor authentication is always a good idea.
UK inflation is being driven by booze and cigs. Consumer prices went up, against expectations, to 4%. Tobacco increased 16% while alcohol was up 9.6%.
75% of millionaires believe they should be taxed more heavily. The survey measured the sentiment of people in the richest countries who have more than $1 million in assets.
The new Bitcoin ETFs took in $871 million in their first three days of existence. Less than expected.
Remote work doesn’t reduce productivity, a big new survey finds. Bad news for bosses who think everyone should be in the office!
More from Moneyin2
Photos: Brittany Pietsch; Cody, Flickr; Clyde Robinson, Flickr.