The stock markets have been crushed over the last 18 months and in our neverending search for safety and security combined with great returns, we have seen a seemingly mindnumbing amount of commercials and print telling you to invest in gold. However, don’t get the impression that gold is without it’s risks.
First, I should mention that one of the easiest ways to invest in gold is through an ETF, ticker GLD.
But while the commercials argue that gold provides safety or “if gold goes to $2000 an ounce the gold in my hand and on this table could be worth $160,000,” the returns of gold can often be very stock-market like.
Last summer gold hit $1000 an ounce, a nominal record high. As the economy slipped the price fell below $700 marking a 30% plus decline. Since then, it has raced back up to $1000 before falling in recent days to around $920. Seems pretty equity like to me.
Then consider the fact that gold is an asset, and that’s it. It doesn’t produce anything. It doesn’t pay any dividends. You are mearly betting on the fact that others will value gold in the future more than they value it right now – a simple supply and demand play.
Now I’m not arguing that gold and other hard assets don’t have a place in a well diversified portfolio, because it does at perhaps a 5% weight. I’m simply saying, don’t sell out of the stock market expecting to find safety in gold. It doesn’t work that way.
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Agreed, there’s been too much euphoria over gold. I do believe in the merits of gold in the long run, but right know, it’s over-hyped.
I agree that gold can be very volatile, but the undeniable trend is up. The stock market is at the mercy of the Fed Reserve – when it prints money the market goes up, when it stops, the market goes down.
Gold, at least, cannot be manipulated.
Invest in shares and bonds, but I suggest you do hold a small part of your portfolio in gold.
really free?lol,it is a great deal
I agree that gold fever is dangerous for finance safety, but is crisis (that I believe shall return) gold could be the only stable measure of value, so in long-term period it shall rise.
If comparing to Stock Markets in world or asia, India is one of the best among comparing all others.The reason behind that is India have an very strong line backup in savings and their investment differs in many ways.In India NSE index named Nifty is the top gainer than Gold.In this first quarter of 2012 10grams of pure Gold rate is Rs.27600 which 3% higher but the same time BSE’s Sensex is 12.68% higher and NSE’s Nifty is 14.7% higher.This is an example which the Nifty is top gainer than Gold in India.In this same time Silver got 8% rise which is better than when compared to Gold.