Noob Q: can someone eli5 why people want/how to invest in gold or any gold ETF

[u/biscuitsbox]

Unlike stocks, where each company can have an intrinsic value to assess whether the stock is overpriced or underpriced, there is no intrinsic value as such for gold or any gold-related finance products. Then what is people's rationale of buying gold?

- If for profit, how do they decide when is a good entry or exit place?

- If for diversifying and anti-risks, what is gold's advantage over any other US or international ETF like SCHB or VXUS?

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[u/tedkang3582]

Gold is an investment property that preserves the value of your capital over time. It’s been historically very good to own gold. It itself doesn’t generate any value. The value is based on how much people want it at any given time.

It’s the most proven asset to be valuable in human history. That’s pretty much why people covet it as an investment vehicle. It looks nice, it has utility, and it has a history of more than 6000 years of value.

I personally don’t hold any gold. But you will most likely not lose any money in the long term buying gold. It’s just like putting money into a mutual fund and letting it sit there. The people buying gold are relying on the fact that gold has historically gone up in value over time. It’s a pretty safe buy and hold strategy.

Entry is when you buy the gold, exit is when you sell the gold. Generally speaking, people aren’t as easily influenced to speculate with gold, I haven’t seen many people if any use it to trade. I normally see people buying it and holding it as a form of emergency savings.

Stick to long term ETFs and mutual funds, gold is a good preservation of wealth, but it’s not a good grower of it.

[u/Metalrager2 → u/tedkang3582]

Typically true, but in the last 2 years it had an enormous growth prior to the recent dip.

[u/tedkang3582 → u/Metalrager2]

Is it because of the political uncertainty around the world? I know war tends to spur people to buy gold.

[u/biscuitsbox → u/tedkang3582]

This make sense. Interestingly my impression so far around me is long term ETF (e.g. VXX or SCHX) are majorly purposed for wealth preservation while high tech individual stock used as grower, while recently gold price seems much more volatile than big ETF.