Thinking of buying gold while it's down?
Its recent collapse could provide an entry, but investors need to be careful about how they get into the precious metal.
Gold futures prices touched $1,275.60 on Thursday in New York, their lowest level since Sept. 21, 2010, as investors were spooked by Federal Reserve Chairman Ben Bernanke's comments that the central bank would probably unwind its ultra-stimulative monetary policy in coming months. The uncertainty around the Fed's action will depress gold for some time. One analyst told Bloomberg gold may hit $1,100 this year.
For investors, though, this is a historic buying opportunity.
But before investing in gold, there are some things to consider.
Most investment advisers tell clients that they should have some exposure to gold as part of a diversified portfolio. That doesn't mean people should sell all other earthly possessions and start stockpiling it. Putting all your eggs in one basket is always a bad, and gold is no exception.
Though polls have shown that many Americans think gold is the best long-term investment, the precious metal's track record over the long term isn't great. It took gold 30 years to recover from its one previous slump. There are practical considerations, too.
Anyone who sells gold coins or exchange-traded funds backed by physical gold can be subject to 28% tax rates. As long as investors understand those risks, gold ETFs such as SPDR Gold Trust (GLD) are fine. Coins are best avoided if possible because they need to be stored securely.
A better bet may be the stocks of miners such as Barrick Gold (ABX).
Its shares have plunged more than 52% this year amid delays in production at one of its mines in South America. But Wall Street still has faith in the Canadian company. The average 52-week price target on the stock is $28.59, more than 73% higher than where it currently trades.
Those potential returns are pretty golden and lack the tax issues of other gold investments.
Jonathan Berr owns a small stake in GLD. Follow him on Twitter @jdberr.
Of course! Who needs fiat currency? No asset like gold keeps its value over periods of uncertainty.
Have to laugh. The banksters keep the chump public baffled with BS and white noise day in and day out. The small investor is left with a thoiusand yard stare, not knowing which way to turn until one day...he wakes up and his pockets are empty.
ll you have to remember is that it's no longer about making money.......it's about preservation of existing capital. He who has 2 nickels to rub together when this circus ends is the winner.
If people rush to buy gold then doesn't that undercut the dollar and keep us where we've been all this time? So which is it?
This article reeks of mis-information planted to make a handful of people even more rich. Throw out some bogus info while they buy it up today then watch it shoot up because someone said buy and watch the masses rush to it.Then when its up in a day or 2 they dump it for a quick profit. Gold is dropping this ride was good but you better take your winnings and leave because just like a casino, you'll loose it the longer you play.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
New study finds members of this global elite are stashing an average $600 million each in cash -- 10 times more than a year ago.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.