Be cautious when investing in gold

Have you seen commercials on television lately talking about gold as the perfect investment vehicle? I’ve seen several of them lately, and I’m a bit mystified. Before I go into details about why I find this strange, check out this article about conservative talk show hosts and their links to gold advertisers. There’s a lot of gloom and doom out there, and the economy is far from strong, but do your best to ignore these commercials.

The economy is in lousy shape, but from what I’ve seen, read, and experienced, the worst is behind us. Stocks and real estate have plummeted in value over the past year or so, and in the case of stocks, a substantial portion of their value has recovered. Many pundits (but not this one) seem set on convincing us that the financial apocalypse is upon us. From what I can tell, they’re wrong. The financial system is weak, but it certainly isn’t dead.

To hear some tell it, they are pouring cash into gold. What ever you do, approach this idea with extreme caution. Gold prices are currently at $1200 per ounce, which is an all-time high. A great deal of that increase is likely pushed by people leaving other assets, such as real estate and stocks, which have plenty of room to grow. Gold could climb higher, but think about this: Do you want to risk being one of the people who risks buying at the top of the market? Do you remember the .COM bubble in the late 1990′s? How about the real estate market of recent years?

People are scurrying for gold, so maybe you should go in the opposite direction. Of course, if you want to risk being part of the latest asset bubble, then be my guest.