Money Rehab with Nicole Lapin - Is Gold Worth the Hype?

Episode Date: September 21, 2021

Is investing in gold just like it looks in the late-night infomercials? Not exactly. Today, Nicole explains how it works and whether you should buy. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Gold is one of those topics that is somehow elusive, but also center stage.

It's like airplanes. Sure, you've seen them in the sky. Maybe you've been on one. In the pre-pandemic days, I basically lived on one. But do I know how they work? Hell no. I just trust the process. Gold is kind of the same.

A lot of people know that gold is valuable and that many people advocate for gold as an investment. But what does that actually look like? How do you invest in gold? Where do you even get gold? Money Rehabber Ethan wants to know if an investment in gold is a golden idea. Here he is. Hey, Nicole. My name is Ethan and I live in Chicago.

I was listening to your episode with Guy Adami and was really interested in your conversation about gold. I've seen online that a public opinion is kind of split. Some people are super into gold as an investment and some seem to think it's kind of dumb. What do you think? And also, if it is a good idea, where do you get gold? Yes, Ethan, I totally see the same split public opinion online. It's hard to know who to believe. Some people tote gold as the be-all, end-all of investments, while others say investing in gold is just a scam you see on late-night commercials. So let's settle this once and for all. In the finance world, gold falls into a category of investments called commodities. In general, commodities are divided into two categories,

hard and soft. Soft commodities are things that grow, like corn, cattle or meat, sugar, cotton, and coffee. Hard commodities are things that are drilled or mined, like crude oil, natural gas, aluminum, silver, and yes, gold. For the folks outside of the financial industry, the most common commodity to get involved with is gold. Gold doesn't offer income or dividends like stocks, but it's considered a safety or safe haven bet. Although the price itself isn't guaranteed to be stable. People think that if paper money fails, then gold can save the day. I mean, that's a little bit of a zombie apocalypse scenario,

but it's true. The other reason many investors have a little bit of gold in their portfolios is as a protection against inflation. As we talked about with James Altucher, inflation is the condition where the cost of goods is more expensive than it used to be. It's why movie tickets were five bucks in the good old days and now they're 15. Historically, gold has been a good hedge against inflation of the U.S. dollar. If you're sold on gold, there are a few different ways to invest. And that is pretty much true of all commodity investments. The simplest and also hardest way is buying the actual commodity because that means having gold bars or coins or bushels of corn lying around your place. That never seemed ideal to me, especially when I was storing my sweaters in the oven for lack of space in my apartment. to go with a public company that produces a commodity like Rio Tinto Group for minerals

or Archer Daniels Midland, which produces wheat, corn, cocoa, and other agricultural commodities. Or if you don't want to put all of your eggs in one basket, you could buy a commodity exchange traded fund or ETF. We'll get more into this in other episodes, but ETFs are slightly similar to index funds in that you're not buying stock in one company. Commodity ETFs would have a smattering of commodity producing companies in the fund. For today's tip, you can take straight to the bank. Historically, inflation has increased, and I think it's reasonable to assume it will continue to do so. has increased, and I think it's reasonable to assume it will continue to do so. So I'd recommend that in your portfolio, you do include some hedge against inflation. I'd keep in mind that gold is a really common hedge, but it's not the only option. There are plenty of others like treasury

inflation protected securities, tips, or crypto. So if you can't get those late night gold infomercials out of your head, keep listening to Money Rehab to learn about other hedges against inflation. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team, Michelle Lanz for her development work, Catherine Law for her production and writing magic,

and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.