A lot of financial advisors have suggested investing in gold lately, since the U.S. economy seems headed for the crapper and gold tends to increase in value as the dollar plummets. And a lot of people seem to be following that advice, because gold is up above $750 an ounce now, “its highest level since 1980,” says SmartMoney. But gold investments can change value quickly and can be even more difficult to predict than regular investments, so don’t go all Scrooge McDuck on the gold hoarding.
Gold’s prospects can rise and fall quickly. And, if you’re like most investors, you probably don’t have that Ph.D. in economics that will help you predict inflation and make a gold fund worthwhile. “The economy can always blindside you,” says David Yeske, co-founder of wealth management firm Yeske Buie in San Francisco. “Trying to predict how certain sectors will perform is almost impossible. I don’t like making narrow bets like that.”
SmartMoney suggests you’re probably “better off in a broad-based commodities fund or with a low-cost equity offering that’s run by a seasoned stock picker.” If you do decide to invest in gold, make it no more than 2-10% of your portfolio, and consider looking for an option you can get into and out of quickly.