All That Glitters Is Still Gold, but Should You Buy It?

Everywhere you turn these days, it seems as if someone is telling you that now is the best time to invest in gold.

Should you consider it?

Historically, gold has been considered a “safe haven” in times of economic, financial and geopolitical instability. This is certainly the case today, given the debt crisis in Europe and unstable political environments in other parts of the world.

Inflation and currency devaluation are good reasons to invest in gold, because it holds its value. And there is potential for those conditions to develop today.

Gold’s greatest advantage is that it performs differently from other assets, which is why many recommend gold stocks as a way to diversify a portfolio of stocks, bonds and real estate. This helps protect against inflation, debt default and bad investment climates.

That said, no investment is a sure thing, and gold is no exception. That’s because its price can fluctuate widely. For example, it declined from more than $800 per ounce in the 1980s to $250 in the 1990s. Since then, it’s been on a tear, and in October of 2012, exceeded $1,700 per ounce.

If you’re interested in investing in gold, you can do so in a number of ways, from buying gold itself to buying stocks of gold-mining and gold-producing companies. The latter is simpler, as it allows you to obtain the potential advantages of rising gold prices without physically taking possession of gold. But buying gold stocks can require some research. Discuss it with a financial professional.