The value of gold is highly volatile and can easily collapse

The argument

Volatility is when a stock hits extremely high or extremely low prices, and these fluctuations are not entirely predictable. It does not have a stable price and oftentimes, it's hard to predict beforehand how it's going to behave. Gold is considered to be highly volatile because its value tends to change very quickly and drastically. There is a high level of risk associated with such items and many tend to stay away from them. A common statistical tool used to assess the volatility of an item is to look at its standard deviation: A measurement of the degree to which the value deviates from the mean. A high standard deviation means that there are large fluctuations with prices hitting record highs and lows. A low standard deviation value shows that the value of the investment is more or less the same across a large period of time. The standard deviation of gold, which was measured over a five year period till March 31, 2018, was around 16. The annualized return was around 4%. To put this in perspective, the standard deviation of gold has almost always been higher than that of S&P 500. Furthermore, it does not follow the stock market trends. This makes it even harder to predict the value of gold in the future. All of these show why gold is considered such a tricky and risky investment. While its highs can be enormous, it's much more likely that someone does not profit with such a volatile investment.

Premises

Counter-arguments

The highly volatile nature of gold is exactly what makes it so appealing to many investors. Although it is quite risky, it gives traders the chance to buy gold when it priced very low and sell it at times when it is overpriced. Many traders have made a small fortune by following this approach. Furthermore, volatility can be predicted through numerous mathematical equations and computer software programs. These hypothetical predictions might not always be accurate but they do give investors a firm idea of the future projections of their investment. By using these tools, it is quite possible to profit immensely from investing in gold.

Rejecting the premises

[Rejecting P1] Volatility is a description of price behaviour rather than a verdict on an investment. Equities are volatile too, and are not generally described as terrible investments on that ground; what matters is return relative to risk and how the holding behaves alongside everything else owned. [Rejecting P2] The figures are for a single five-year window ending in 2018 and are presented without a comparison return for the S&P 500 over the same period, which makes the risk-adjusted comparison the premise gestures at impossible to evaluate. [Rejecting P3] Low correlation with equities is the premise's clearest error. Moving independently of the stock market is the principal reason gold is held at all — an asset that falls when equities fall adds risk to a portfolio, and one that does not reduces it. The argument presents the property that makes it useful as though it were a defect. [Rejecting C] The counter-argument on record adds that price movement is what creates opportunity for those trading it, and that volatility can be estimated rather than being wholly unpredictable. The conclusion also does not follow from the premises: unpredictability is a reason for sizing a holding carefully, not for the categorical judgement the position asserts.