INDIANAPOLIS — The price of gold continues to hit all-time highs, leading many people to wonder whether now is the time to sell — or invest.
“As a practice, we don’t tend to add gold to portfolios,” said Brad Clark, an investment advisor at Solomon Financial. “If we do, it tends to be very minimally. The reason for that is historically, if you look at gold returns, they will tend to be lower than traditional markets.”
While gold has its ups and downs, its current appeal comes from the news that it’s reaching record levels.
“The appeal of it is that it’s generally thought to hold its value against the decline in the value of the dollar, which we have seen in recent years,” said Samuel Taube of NerdWallet. “And in theory it’s also supposed to be uncorrelated with other assets like stocks, although that’s not always the case in practice. But again, it’s an investment, and like any other investment, it goes through highs and lows.”
Taube cautions that gold’s current surge could stall.
“If the fear that has driven gold up past the $4,000 mark doesn’t continue, someone could find that they’re investing in something that’s not going to surpass its current high for several years,” he said.
For those interested in investing, there are several options. Investors can buy physical gold — such as bars or coins — or they can purchase shares in gold-backed exchange-traded funds (ETFs) or mining companies.
“They can sometimes outperform the physical metal itself or other types of stocks,” Taube said. “That introduces a little more complexity to a gold investment in that the financials of the companies is something you pay attention to.”
Clark recommends keeping any gold investments to a small portion of an overall portfolio.
“The biggest things I would say about gold is you have to view it like you do art or any type of collectible,” he said.
