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Time To Buy Gold Or Not?

This article was written by in Investing. 6 comments.

The price of gold has been high. In fact, it hit a 25-year high recently. Everyone saying it’s time to buy and that prices will go only higher. Everyone is also warning investors to stay away. A pair of articles on MSN Money give you the option of choosing your point of view while having someone support your opinion.

First, Jim Jubak presents the case for gold. He’s happy that not everyone (like me) is convinced that it’s a great time to buy:

If everyone is a believer, there isn’t a reservoir of potential buyers ready to increase demand for shares. You make more money investing in the trend when at least a sizeable minority of investors doubts the trend — or worries that it’s about to come to an end — and resists buying into the trend even while other investors are making money.

Alternatively, Timothy Middleton thinks the recent high is a sell signal, and too many people are fans of the metal:

… [I]n the latest rally, gold has also lost any semblance of fulfilling its traditional role as a hedge against inflation and the depreciation of paper currencies. While gold has gone up more than 35% in the last year, inflation has barely budged and the dollar has actually strengthened.

I smell a showdown in the CNBC corridors.

Updated February 6, 2012 and originally published February 14, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 6 comments… read them below or add one }

avatar Will Kirby

I’ve been wondering about gold myself. I’ve been thinking of buying into a Gold ETF on the next slump but I just can’t pull the trigger. The thing about Gold though is that while it may be in a short term “bubble”, I think it’s a really solid play for the next 10 or 20 years. While I think that, I have a tough time pulling the trigger on a stock/asset that I feel i’ll be comfortable with in 10/20 years but not right now.

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avatar WTJ

the price of the gold is really too high now.. it’s better to buy low sell high

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avatar jim

Buy Google!

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avatar Luke Landes

The price is high compared to the last 25 years, but is it high compared to the next 25 years?

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avatar Will Kirby

Flexo’s right – I bet 25 years from now we’ll look back at the price of gold right now and think it was a steal. Does that mean i’m ready to pull the trigger – nope!

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avatar mbhunter

Gold would need to be $1400/ounce (inflation adjusted) for it to match its high in the early 1980s.

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