Debunkery: Learn It, Do It, and Profit From It—Seeing Through Wall Street's Money-Killing Myths

BUNK 35

WITH GOLD, YOU’RE GOLDEN

Another history lesson: Long ago, people drank old to reserve their youth. Silly them! Poisonous, too. It was recently discovered French King Henry II’s famous mistress, the lovely (and two decades older than him) Diane de Poitiers, died from gold poisoning. She would have been better off avoiding the sun and not smoking.

Thankfully, folks don’t drink gold now. (Though people do inject themselves with botulinum toxin. Honestly, this quest for youth will kill us.) Yet investors should learn from Diane de Poitiers, lest they harm themselves with too much gold.

Gold fades in and out of favor as a hot investment. Not surprisingly, it tends to spike in popularity after a big run-up—which explains why it was so popular in 2010. (That an investment is popular—talked about and advertised endlessly in the media and seen by many as “the thing”—should be enough to deter you.) Gold is a commodity. An investment class like any other. There’s nothing inherently special about this metal making it immune to losses. Gold as a safe harbor is bunk. Sometimes it rises. Sometimes it falls.

Many have some sort of emotional attachment to gold. Perhaps it stems from ancient history, or watching too many Western movies where fortunes were made and lost during the Gold Rush. Or maybe it’s from the now-abandoned gold standard for currencies. Since most currencies began to float freely (though some are still pegged—usually to the dollar), gold’s usage has been mostly for ...