Would ChatGPT Buy Gold As an Investment?
If you want to be wowed by technology (or terrified of it), ChatGPT, the artificial intelligence bot that has become wildly popular in the last couple of weeks, is worth a look. This software has, almost single-handedly, inspired a new speculative frenzy in tech stocks.
I may be a little late to the party, but I thought it would be worth taking a few minutes to see whether ChatGPT could replace a Birch Gold Precious Metals Specialist.
Here’s how that conversation went…
ChatGPT, please call me Phillip.
Hello Phillip! How may I assist you today?
ChatGPT, do you agree or disagree with the following statement: “Gold has been a store of value and a medium of exchange throughout human history” ?
I agree that gold has been used as a store of value and a medium of exchange throughout human history. Gold has been highly valued for its scarcity, durability, and aesthetic properties, and has been used as a form of currency and a medium of exchange in many civilizations, from ancient times to the present day. Gold has also been used as a store of value because of its ability to retain its value over time and its relative stability compared to other assets.
Note: Every response from ChatGPT on financial topics is wrapped in massively hedged language, for example:
I removed all the lawyer-language from our conversation – after the fifth repetition, it got really tiresome.
Back to our dialogue…
ChatGPT, you said of gold “its ability to retain its value over time and its relative stability compared to other assets” — can you please elaborate on what this means?
Certainly! The value of gold has historically been relatively stable over time, especially compared to other assets like stocks or currencies. This means that if you had bought a certain amount of gold at some point in the past, its value in terms of purchasing power would have been relatively similar at other points in time, even centuries later.
For example, let’s say you bought an ounce of gold for $35 in 1971, when the US ended the gold standard. At the time, you could use that $35 to buy a decent suit, a typewriter, or about 100 gallons of gasoline. If you held onto that same ounce of gold until today, you could sell it for roughly $1,800, which is roughly the same purchasing power as that $35 in 1971. However, if you had kept that $35 in cash under your mattress, it would have lost a lot of purchasing power due to inflation over the years.
Gold’s stability as a store of value makes it an attractive investment for some people, particularly during times of economic uncertainty or inflation. It’s also one of the reasons why central banks still hold significant amounts of gold in their reserves.
ChatGPT, why do central banks still hold significant amounts of gold in their reserves?
Central banks hold significant amounts of gold in their reserves for several reasons, including historical precedent, financial stability, and diversification.
Historically, gold has been used as a store of value and a medium of exchange for thousands of years, and has often been seen as a symbol of wealth and power. Central banks have been accumulating gold reserves for centuries, and continue to do so today as a way to maintain continuity and stability in their monetary systems.
Gold is also viewed as a safe haven asset, and is considered a hedge against inflation and currency risk. Central banks hold gold reserves as a way to diversify their foreign exchange reserves and reduce their exposure to other currencies or assets. In times of economic and financial uncertainty, gold is often viewed as a safe asset to hold.
Additionally, gold can also serve as a form of collateral, as it can be easily liquidated in times of need. Central banks may hold gold as a form of contingency planning or as a last resort option to provide liquidity in case of financial distress.
Overall, gold remains an important asset for central banks, and is likely to continue to be a part of their reserve holdings for the foreseeable future.
ChatGPT, is gold money?
Gold has been used as a form of currency throughout history and is still considered a form of money by some people today. However, it is not used as a primary medium of exchange in modern economies like paper money and digital currencies are. Instead, gold is often viewed as a store of value, a hedge against inflation, and a safe haven asset during times of economic or geopolitical uncertainty. Some people also invest in gold as a speculative asset in the hope of earning a profit from its price fluctuations.
ChatGPT, is gold a suitable asset for diversifying investments?
Gold has historically been considered a suitable asset for diversifying investments because it has a low correlation with other asset classes such as stocks and bonds. This means that when the value of other assets declines, the value of gold may not necessarily decline at the same time. Additionally, gold has been viewed as a store of value and a hedge against inflation, as its value has historically tended to rise during times of high inflation or economic uncertainty.
Please describe the similarities and differences between physical gold and physical silver as an investment.
Both physical gold and physical silver can be used as investments and are popular choices for diversifying portfolios. Here are some similarities and differences between the two:
Note: Have you ever gone shopping for jewelry? It does not sell by weight! Premiums over spot price for gold jewelry start at about 30% and premiums on silver jewelry are much, much higher. This was a huge red flag.
What happens to gold’s price when equities, stock indexes for example, decline?
Gold has often been viewed as a safe haven asset, meaning that investors tend to flock to it during times of economic and financial uncertainty. This is because gold is seen as a store of value that is not subject to the same economic and market forces that affect other assets, such as stocks and bonds.
When equity prices decline, investors may become more risk averse and seek to reduce their exposure to stocks and other risky assets. This can lead to increased demand for safe haven assets like gold, which can in turn drive up the price of gold.
However, it’s important to note that the relationship between gold and equities is not always straightforward or predictable. There are many factors that can influence the price of gold, including global economic conditions, geopolitical events, and monetary policy decisions, among others. As a result, gold’s price movements can be complex and difficult to predict.
So, what does ChatGPT know about gold and silver?
Here’s what it got right:
What it got wrong:
Some of my friends (journalists, graphic designers and writers for tech publications) are seriously concerned that ChatGPT, Stable Diffusion and similar AI-powered tools will soon render their skills obsolete.
After spending some time with it, I’m not worried. I’m really glad the AI included all those disclaimers and recommendations to seek actual professional guidance before making any financial decisions!
Considering the importance of the things it got wrong, I conclude that ChatGPT, while it does know a lot about gold and silver, is no replacement for an actual Precious Metals Specialist. If you want to learn more about physical gold and silver, we’ll be here to help – long after the AI craze has passed.
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