Dec 24th, 2002
Is it time to load up on gold?
The price of an ounce of gold bullion has climbed to the highest level in more than five years, and has recently been closing in on the 350-dollar-US mark. There's been a big jump in gold stocks, and precious metals mutual funds have also been soaring. So, is this a good time to jump in?
Well, first realize why gold has been on the rise. The immediate reason is the looming war with Iraq. Before that, of course, it was Osama bin Laden and the events of September the 11th. That suddenly made the strongest country in the world look weak, and raised questions about fundamental safety and the ongoing value of the American dollar.
Gold has always been seen as a hedge against paper money and a currency of last resort. In some parts of the world, it is hoarded as pure wealth. There is no doubt that throughout human history, the shiny, pliable metal has been treasured.
But that doesn't necessarily make it a wise investment asset. In fact, gold is a purely speculative commodity that, outside of jewelry and a few industrial uses, really isn't good for much. It doesn't pay interest or dividends, which means you only buy it if you think it will soar in value. But at a time when there is little inflation and solid economic growth, why should it?
So, leave gold for your finger. Invest in stocks.
There's more online at garth.ca. I'm Garth Turner |
