As we saw lately, gold price has been soaring. It is not traded at above $1,200 per ounce. Are we (we = 1stmilliondollar.net) a gold bug? Are we buying gold?

We used to like keeping money in gold. However, we have changed our strategy since last year, i.e. not to invest in gold at all. Why? First of all, we read Warren Buffett’s quote about gold:

[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head

Basically he is saying that why invest in something that has no utility. Gold will do nothing for us. This quote keeps us thinking, why we are investing in gold then.

The second reason is because gold is just a currency. The value will never go up or down. It is just our dollar that goes up or down in value. If we can buy a car with 1 bar of gold today; we should be able to buy the same car with 1 bar of gold in 20 years from now. The price of the car might be double or triple; but in terms of value, it is just the same.

As summary, we don’t invest in gold at all these days. However, we invest in some gold companies indirectly through Canadian index. The two largest gold mining companies in the world are Canadian companies; and they are included in Canadian’s S&P/TSX index.

(Picture is from Mykl Roventine @ flickr.)