<prompt> Human: Is it a poor or an alright idea to buy some precious metals.. silver.. gold.. etc.. say 10k worth... and hold on for the long term? In addition to ETFs and other investments, not as a substitute.  <response>: Heres what you need to know about gold and precious metals:Cons: Gold produces no income. Real estate produces rent, stocks produce dividends, bonds produce interest, but gold just sits there. The expected return of gold, after accounting for inflation, is zero. Once you account for taxes precious metals are taxed as collectibles, which is a higher rate than capital gains, the expected real return of gold is less than zero. The price of gold is volatile; generally more volatile than that of stocks. The more gold you allocate to a portfolio of stocks and bonds, the lower your expected return will be.Pros: The price of gold is uncorrelated with that of most other assets. Including a small amount of gold in a portfolio of stocks and bonds reduces the portfolios volatility. Including a small amount of gold in a portfolio of stocks and bonds has a small effect on its expected return.I have a spreadsheet I use for backtesting portfolios, and here is a chart I just made showing the inflation adjusted returns from 1972 to 2013 for two portfolios, one thats 100 stocks and another thats 85 stocks and 15 gold. Youll see that the portfolio with gold actually outperforms the 100 stock portfolio, but is noticeably less volatile. The chart is logarithmic and accounts for inflation. I excluded bonds for simplicity, but the chart looks about the same when you do. In case youre wondering, a gold allocation of more than 15 starts to cut into your returns; a gold allocation less than 5 is too small to make a difference. 