In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks, "Does it make sense to hold a significant portion of one’s assets in precious metals?”
Neither Jason nor Brendan happen to be proponents of investing in precious metals. Brendan admits that a small investment in precious metals might deliver some diversification to your portfolio, but he doesn't think precious metals are worthy of a "significant portion" on assets, at least for the majority of investors. Precious metals investments don't generate significant returns after inflation, and they tend to be very volatile. Jason points out that precious metals, like gold, don't generate income -- they just sit around incurring storage costs. He believes that investor interest in gold may be a function of recency bias.
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