Gold Investing is Speculative

    Published: 06-16-2009
    Views: 4,129
    Financial Advisor Ric Edelman explains the truth about investing in gold including why it is so speculative.

    Ric Edelman: Gold has been getting an awful lot of attention lately, but investing in gold is anything but a sure thing. The truth is that gold is a speculative investment, the returns are not guaranteed. To help you understand this, let's take a look at the last gold rush, the late 1970s and early 1980s.

    Back then, inflation was rampant, the government had just bailed out Chrysler with a $1.

    5 billion alone, investors were flocking the gold, while the media egged them on, pushing up the price to a record $850 an ounce according to the New York Mercantile Exchange.

    At that time, gold seemed like a 'can't miss' investment. It sounds like today, doesn't it? But, what happened next? Well, the run-up in price didn't last. Gold peaked in January 1980 and then prices fell, and kept falling for nearly 20 years. Gold finally bottomed out about $253 an ounce in 1999. It took another 7.

    5 years for prices to get back to their 1980 high. Yeah, it took 27 years for investors who bought at the peak to get their initial investment back. And during that whole time, their gold paid no dividends, no interest, no income unlike stocks, bonds, and real estate.

    So if you're worried that you're missing out by not investing in gold, you can relax. You might not be missing a thing.