Comments on: Gold hits $1,000: Should I Invest In Gold?

By: Pinyo

Pinyo — Wed, 11 Feb 2009 22:20:21 +0000

@Andy – Everything is low right now. But instead of just pure gold play, I have been thinking about commodities index fund or ETF.

By: Andy

Andy — Tue, 10 Feb 2009 16:14:03 +0000

I know this artilcle is a bit old, but it is very relevant and now could be an excellent time to invest in gold. I recently looked at investing in gold my self and after being anti-gold for a long time, have started to warm to it. However, I still see it is a hedging strategy in case stock markets start to tumble even more, rather than a pure play, long term investment

By: Llama Money

Llama Money — Tue, 25 Mar 2008 22:21:27 +0000

I don’t think gold is a good buy-and-hold play, as this chart demonstrates clearly. Rather, it’s something you buy when you think the dollar is on a downturn, or when you think inflation is going to rear it’s ugly head in a big way. Though the rise of gold has been huge, I think it’s got quite a lot of upward movement left.

The only problem, like stocks, is to figure out when you’re at the top, and when to sell.

By: David

David — Wed, 19 Mar 2008 07:35:30 +0000

If you had bought $10,000 in gold in January 1980, you would just now be breaking even and it would be worth $10,600 today. However, $10,000 invested in the S&P 500 in January 1980 would be worth $279,000 today.

And that is why I stay away from gold. Not that it isn’t fun to hold, but still…

Oh and thanks to Money Magazine for them stats!

By: Pinyo

Pinyo — Tue, 18 Mar 2008 23:05:45 +0000

@Mike — I have plenty of lead in my walls…don’t need anymore

@Eden — I am certainly not planning to, aside from what I already have in term of jewelries.

@THR — I guess when things get really bad, even gold wouldn’t matter much.

@Adfecto — Good add.

By: Adfecto

Adfecto — Tue, 18 Mar 2008 21:52:54 +0000

Commodities have a place in most portfolios in SMALL amounts. A diversified holding of precious metals should be a part of that. Keep it small and realize that it is to hedge against inflation and reduce volitility and NOT to provide an outsized return. Most of the runup in gold has been due to inflation and the falling dollar rather than true scarcity. It is important to note that if you were to simply hold assets that are denominate in a currency other than US dollars you would have done rather well. Instead of gold, I’d recommend foreign bonds (denominated in the local currency) because they will fight the falling dollar and have a real return (as opposed to gold’s 0% real return).

By: 7million7years

7million7years — Tue, 18 Mar 2008 21:43:09 +0000

I had the great pleasure of buying 5 oz of gold when I was in college … but, I had to sell it in a hurry when my new car arrived … I lost $50 in the transaction. Of course, gold jumped to $800 an oz – starting about a week afterwards … so I think I am the only person in history to have lost money in the last gold boom.

Needless to say I learned a lot about selling an investment to buy a depreciating item … and, I’m happy to say, I generally learn from my mistakes!

By: Aaron Stroud

Aaron Stroud — Tue, 18 Mar 2008 19:30:01 +0000

@Eden, you’re exactly right. Someone would have had to have been lucky enough 10 years ago.

William Bernstein has some excellent information on using gold and precious metals in his book The Four Pillars of Investing. However, the information isn’t for the casual reader or investor. Effectively including gold and precious metals in one’s asset allocation is difficult.

By: The Happy Rock

The Happy Rock — Tue, 18 Mar 2008 17:52:45 +0000

Historically, I think the return on gold has been ~4% a year, and the stock market is ~10%, not much of a comparison there.

Also I would think in real instability, the barter system would take over. Gold wouldn’t be very valuable then.

By: Minimum Wage

Minimum Wage — Tue, 18 Mar 2008 14:30:49 +0000

I would have bought gold at $300, now is a good time to sell. I did buy some silver coins back when silver was around $7 an ounce, but I had to sell a few months ago and wasn’t able to get as much of the gain as if I had held longer.