Stocks vs. Gold

There’s been a lively debate in some sectors of the financial media over the relative merits of stocks and gold. Warren Buffett, Jeremy Siegel and Larry Fink not surprisingly came down on the side of stocks. Others point out the dreary returns from stocks over the last 10 or 12 years, the significant increases in global monetary supplies, and conclude that gold has been the winning investment for over a decade and is likely to continue.

This article does a good job of laying out both sides of the argument while coming down on the side of those favoring gold.

Fink’s and Buffett’s preference for equity investment may have nothing to do with expectations regarding things like economic growth or profits, just money printing. This is not founded on sound economic reasoning, rather simply shifting capital into an ever-rising bath.

What happens when central banks stop filling the bath? Or worse, take the plug out?  Or worse yet, find that they are no longer in control of the water?

The investment world does not come down to an all-or-nothing decision between debt (mostly rubbish, now, admittedly) and equity. While the bigger picture is fraught with monetary mismanagement in response to a grave crisis, there are plenty of other investment choices out there, and a growing argument underpinning the ownership of real assets.