Gold is hot at the moment. Gold is up a whooping 84% in the last 3 years. The gold investors who so it coming have made some serious money.
There are many reasons as to why gold has risen this high, one is the idea that gold is a safe haven. There is belief that the bailouts of the last 2 years will lead to inflation which causes devaluation of currencies and the only protection against all this is gold.
The idea gold is a safe investment goes back to medieval times. A safe investment means you cant lose your money. But the truth is you can lose your money in gold. What is needed is a change in sentiment and people who bought gold start taking their profit. The gold price trend will be in a reverse gear.
Risks of Investing in Gold
In a Business week interview Susan C. Elser, of Elser Financial Planning Indianapolis gave a good detailed analysis on the risk of gold investment,
Unlike other commodities, gold has few industrial uses. Unlike businesses owned through the stock market, gold earns no profits and doesn’t pay out dividends. Unlike bonds, no one pays interest to holders of gold. And, unlike insured bank deposits, there is no guarantee of your principal investment.
“There is no downside protection on investing in gold,” Elser says.
written by Constantine Njeru
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