Hmm...
Looks like gold may have bottomed...
To da moon now? Time to buy gold calls?
The move out of a correction can be fierce.
All That Glitters Is Not a Great Investment
businessweek.com
Market panics have a way of motivating investors to rush into gold. And a wave of new products in recent years, including exchange-traded funds, mutual funds, and specialized online trading sites, have made it easier for small investors to load up on bling. Given that confluence of events, the metal's price has vaulted from $662 an ounce to about $905 over the past 12 months—a 37% jump—compared with a loss of 6% for the Standard & Poor's (MHP) 500-stock index. Gold is up roughly 150% in the past five years.
But while gold glitters aplenty right now, a recent report from the Wharton School of the University of Pennsylvania warns that it lacks luster as a long-term play. That's especially true since many investors tend to pile in at exactly the wrong time-the peak. With inflation factored in, gold's value has actually declined since 1980, when it reached a high of $850. During the same period, the S&P 500 has risen more than 12% annually. "Gold is a commodity, and it goes up with inflation," says Jeremy J. Siegel, a professor of finance at Wharton. "But when you buy at a period of high anxiety, it's a terrible investment."
—By Ben Levisohn, Edited by Adrienne Carter |
