Don't Buy Gold at $1000 an Ounce!
On television lately I have seen several commercials encouraging people to buy gold now as a way to safeguard one's portfolio against uncertain economic forecasts.
(For a hilarious spoof on these commercials, click here.)
While it is true, as the advertisement suggests, that gold is unlikely ever to lose its value completely (unlike individual stocks), at $1000 per ounce gold is the absolute last thing I would be thinking of adding to my portfolio at this time.
It is still true that the basic rule of investing is to buy low and sell high. I can remember just a few years ago when the gold spot price was under $300 per ounce. I remember thinking then (before I was the savvy and smart investor that I am now) that I should buy up some gold with some spare cash since it was so low. And sure enough, gold is now trading at over $1000 per ounce. But at $1000 per ounce, gold is anything but a bargain.
The television commercials are thinly veiled attempts for gold holding companies to unload their overpriced gold to their "customers" by creating a sense of fear and uncertainty about the economy. As I have posted about previously (read my thoughts on market crashes and see my ETF portfolio here), the absolute best thing that the average Joe can do to prepare for an uncertain future is to contribute regularly to a retirement account such as a 401(k) or a Roth IRA, not to rush out and buy up as much overpriced gold as you can!
In fact, if you have any gold, now may be a good time to consider selling it off and reinvesting your profits in a retirement account. Just don't be suckered in by the fear-mongering. Use your head and ask yourself why those gold companies on television are looking to unload their gold on you at this particular moment. If you are looking for reputable places to buy gold, there are two that come immediately to mind that I have used myself in the past: Kitco and Goldmastersonline.
As I said, I would not buy gold until it returns to a less-inflated spot price, but do yourself a favor and at least buy from a reputable company instead of a company that is just seeking to take advantage of your fears and uncertainties.
