There are many different schools of thought regarding the purchase of gold as a secure investment. An old-school thought is that gold is a good hedge against the inevitable inflation and weakening dollar. While for many years people have included gold in their investment portfolio, and probably will be in years to come, some new age economists are arguing that there is no role in a modern investment portfolio.
Gold is amongst one of the highest commodity investments causing prices to be constantly fluctuating and extremely volatile. Its scarcity greatly increases peoples desires to buy it. Even though the gold standard is no longer tied to our currency like it once was, any increased government attention can cause heavy regulation with price controls or even stopped, the oil industry is an applicable case comparison. A prime example is the actions of President FDR, an executive order was signed in 1933 making it illegal for any US citizen to own more than $100 worth of gold, which would be more or less than $1800 in 2017 taking inflation into account. It wasn’t until 1974 until the citizens of the US were permitted to own gold again.
Contrary to gold, land holds utility. With land, you can grow your own food, find water sources, cultivate useful substances, hunt and simply enjoy it. I’m sure many have heard the saying – “Buy Land, they’re not making any more of it”, well this hold strong truth. With major developers taking over acre after acre, in some states it’s even difficult to find a decent sized vacant piece of property. The industrialization and urbanization has contributed to the scarcity of land.
Also, contrary to gold, the risk of government intervention on the regulations of land are highly improbable. Many local state governments depend on private land ownership for increased and stable funding. Real property gets appraised and assessed with ad valorem taxes on landowners. The yearly property taxes are used to fund local schools, state and county parks and other government essential functions; therefore, landownership is a revenue stream for these local governments. Land is undoubtedly a much more secure and sound investment than gold.
As of July 11, 2017, gold is priced at $40.60 per gram, calculating about $1,262.70 per ounce. In some states such as Wyoming, you can purchase a full acre of land for $1,500, just $300 more than one ounce of gold!
