Today I want to talk about gold.

Gold has long been considered a store of value and investment.

I’m personally not a big fan, and neither is one of the top financial advisors in the U.S.—Peter Mallouk.

Peter Mallouk is the president and CEO of the nationally recognized wealth advisory firm, Creative Planning. His firm has a combined $245 billion in assets under management and advisement.

On episode #356 of The Tim Farris Show, Peter revealed his thoughts on gold, and why he’s not a fan.

I have to say… I agree with him.

Here are his 4 reasons:

1. No Income

If you buy a rental property, you want to collect rent.

If you buy a bond, you want to get the yield from that bond

If you buy a stock, you want to collect a dividend, or, at some point, you want to benefit from the company's earnings, even if it doesn’t provide a dividend.

Gold doesn’t provide any of that.

It’s just a glorified rock.

2. Underperformance

Going back to the Great Depression (1929), gold has underperformed every major asset class.

Your money would have been better off invested in…

• REITs

• Bonds

• U.S. Stocks

• Emerging Markets

• International Stocks

Plus, you could have been collecting some income the entire time.

3. Volatility

A lot of investors have a hard time stomaching volatility (especially if you’re gearing up for retirement).

If that’s you, gold probably isn’t a good fit for your portfolio.

Not only has gold underperformed other major asset classes, but it’s also more volatile.

So you’re taking on more volatility risk, without any added reward.

4. Higher Taxes

Physical gold is considered by the Internal Revenue Service (IRS) as a “collectible.”

Short-term capital gains on collectibles are taxed as ordinary income (like stocks).

But long-term capital gains are taxed at your marginal tax rate, with a maximum of 28%.

Whereas stocks are capped at 20%.

So you’re paying higher capital gains tax on gold (28%) than if you had just bought $APPL or $AMZN stock (20%).

Closing Thoughts

There are a lot of arguments that can be made in favor of gold:

• store of value

• hedge against inflation

• returns are uncorrelated to stocks

• haven during geopolitical and macroeconomic uncertainty

But it doesn't produce anything. The value of gold is that someone else will pay you more for it later, which is speculative at best.

I’d rather park my money in cash-flowing assets like stocks, bonds and real estate.

But that’s just me.

Darrell