Gold is easily one of the dumbest investments, but it doesn't stop people lining up to buy it when it reaches a multi-year high.  If you live in the US--and drive at night--it's hard to miss those late night infomercials on the AM dial.  "Experts" discuss the merits of gold, advising the gullible to "invest" their hard earned money into the commodity.

Recently the price of gold, based on dollars per ounce, has fallen to under $800.  (Since this article was first published, gold has pushed through $1,000 an ounce–big deal)

At face value, gold would seem like a good investment.  After all, nations such as Spain created a huge empire based on the precious metal.  For many years, currency was backed by gold.  Since gold has been around so long, it's pretty easy to value the metal over time.  Adjusting for inflation, one can go back hundreds of years and discover that gold is a really poor investment.  It's volatile too; the price tends to surge when there is fear of inflation or an economic down turn.  Even if one were to buy gold at a low and sell it a the height of its value, it still doesn't beat the return one could get in a broadly diversified portfolio of common stocks or even bonds.  Frankly, there are many money market accounts that outperform gold.

As I have written before, gold belongs in electronic circuits, jewelry, catalytic convertors, even in your teeth: it doesn't belong in a serious investment portfolio.

You can read a related article on investing in gold by clicking here.