Gold advanced to an all-time high above $1,910. It is said that investors sought to protect their wealth against financial turmoil amid speculation that the global economy is slowing. Yesterday’s news reported, “some analysts say it could go above US$2,500 this year.”
I still remember vividly that just before Oil price topped after the middle east unrest, “some analyst says oil price will go above US$300“.
I still remember just before the easy money of silver is over in April, there is an article on Straits Times titled “Silver’s Streak – Price at 31-year high as investors see it as a good hedge against uncertainty”
Now you get my point. Whenever an investment instrument rallies, the news will be flooded with positive views of it. After all, nobody will blame you if you follow the crowd’s opinion. If these comments are just different views, it is still fine. However, many times, news stories are supplied by people who have a vested interest in that particular market.
In the current volatile market, investors must put their money with eyes open. Price is what the greater fool is ready to pay. Gold does not generate profits, gold does not pay you dividends. If you buy gold at $1,900 today, you must expect someone paying a higher price than you in the future.
There is nothing wrong to change your hard-earned money to a piece of metal. However, how many investors recognize that gold investment is a purely speculative play?
I’ve talked about “Investment market is a reflection yourself“. The question you should ask yourself is not whether you should invest in gold, but how much of your portfolio should be speculative and at what price you should be interested in buying.
If you are an investor but join the musical chair game with a group of speculators, when the music stops, you will be the one left out without a seat.