We don't spend a lot of time talking about individual assets but over the last few years (and over the next few) the topic of gold will continue to be a hot issue (especially if Ron Paul runs for president). Gold is an asset (like stocks and bonds) and prior to 1973 the US dollar was backed by gold (we'll talk more about this in a few chapters). Today investors tend to buy gold when they expect higher inflation in the United States and sell gold if inflation is low. All of you have probably seen the infomercials talking about gold being at an all time high. Gold prices spiked following the Great Recession in 2007 and now a debate has started about the value of an ounce of gold. Is gold overpriced? There is no definitive answer. Stocks and housing tend to have a fundamental value, the stock price should reflect future profitability, a home price should reflect the cost of renting. Gold does not have a fundamental value, what should an ounce of gold be? Lately the demand of gold has been increasing drastically while supply has remained nearly unchanged (there are a few gold mines in Africa and Australia).
Anyway here is an interesting article on gold (I'm sure there will be more to come). For those curious $1 invested in gold ten years ago would now be worth $5. Which sounds pretty good, but for comparison $1 invested in Apple would be worth $48 today (an increase of 3600%).