Investing in gold?

[pennrj430]

Hi everyone, I wanted to get some feedback about investing in Gold. Just a quick background on me.. I'm 28, I have no debt aside from a car loan which will be paid off in about a year, and a Rent payment (I'm not interested in being a homeowner at this time). I started investing most of my money the past few years by contributing to my 401K up to the company match, Maxing my Roth IRA, and by contributing monthly into non retirement Mutual Funds. Most of these investments (except for my 401K) are Index Funds through Vanguard, and my portfolio is broken down like this approximately...

60% in Big U.S. Company Funds, 30% in mixed International Funds, and about 10% in Mid/Small cap Funds.

I also have about 4 months of emergency funds in my ING, by the beginning of next year, this should be about 6 months in emergency funds.

I'm sorry for being long winded here, but my question is, what would you say about me adding some gold in the form of Gold Bullion to my portfolio? I would buy it over time to benefit from dollar cost averaging, and would only buy about 10% of what my portfolio is worth per year.

Is this a good idea? If so, why, and if not, why? If you have any other advice, I would be very appreciative. Thank you all.

Ryan

[Scanner]

Most here would agree that gold/silver has a place in a portfolio.

I'd shave it off your large cap.

[disneysteve]

I have a gold and precious metals fund through my wife's old 401K but she no longer works there so we can't add to that. Haven't really thought about adding something outside of that. I guess I probably should.

[pennrj430]

Thank you Scanner and Steve. I think I should add a little to my portfolio to hedge a little. Thanks again.

[humandraydel]

IMHO gold can be a good diversifier IF you use it correctly. Gold (and to a lesser extent silver) is something people flock to in bad times. Stagflation is particularly good for gold because people are fleeing both stocks and bonds, and gold is about the only place to go! As people flock to gold the prices will increase significantly. The key then is to sell gold in bad times and buy stocks when prices are depressed. Of course, psychologically it's hard to sell gold and buy stocks when times are bad - but if you can do this it can increase returns a good bit.

[mekish]

gold is considered the safest, it always recovers. mankind has trusted gold for thousands of years

[humandraydel]

gold is considered the safest, it always recovers. mankind has trusted gold for thousands of years

Talk to people who bought gold in 1979 and 1980.

[jukebox9988]

Gold appreciates when the dollar falls, so if you think the US dollar will continue to tank, then Gold is a great investment.

Also, it's very easy to recapture your investment b/c gold holds its value for a long time. There are lots of ways to invest in gold. ETFs, Direct holdings, gold shares.

Right now It's very expensive, which gives me enough reason to stay away. However over the long run, Gold is a good way to diversify.

[pennrj430]

Thanks for all your input.

[poundwise]

...is something people flock to in bad times.

gold is considered the safest, it always recovers. mankind has trusted gold for thousands of years

You guys sound like a radio ad. In fact, the radio ads are pretty much the only place you will hear such statements. Precious metals and other commodities can be a part of a responsible portfolio but don't buy the hype/marketing too much. In general, over the long haul, gold is a pretty bad investment. Take a look at the average rate-of-return over any significant time-frame and that's evident. Gold has hot periods where it goes up in value quite a bit and cold periods where it falls. The rest of the time, it pretty much does nothing. Check the facts. Take a look at what gold did between 1980 and 2000, for instance.

If you want to own some gold, fine, just don't believe the radio ad hype. Especially the nonsense about "gold has never been worth zero." That'll be great comfort when your investment, ten years from now, has not appreciated greater than the rate of inflation, or worse.