Tips For Sorting Out Gold Prices

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ST. LOUIS, MO (KTVI) -  Remember the days when people hosted gold parties, selling every last piece of it to cash in on record high prices?

Those days are gone.

Matt Allgeyer of Wamhoff Financial Planning & Accounting talked to Elliot Weiler about the pros and cons of sorting out gold prices and selling gold.

Pros:

  • Gold is liquid and tangible, something that can be attractive.
  • Best when used as part of a diversified model.
  • Can offer protection against an economic downturn
  • Can be used to hedge inflation.
  • Scarcity and demand of gold
  • Can provide protection against currency risk

Cons:

  • Gold is not a stable store of value. While it does appreciate with the rate of inflation, it is also very volatile.
  • The volatility associated with gold could carry more risk than the average investor is willing to take.
  • There will never again be a return to the gold standard. Even though certain political groups have been raising the possibility, the majority of economists are highly skeptical. So those who are buying up gold, hoping to cash in when this happens, aren`t following a solid plan.

Advice:

  • Never move to an investment in fear of another investment. Many people moved heavily into gold in fear of the rest of the market.
  • Research every investment you are considering, and have an overall plan. This will help you to be better diversified and not too heavily invested in any one area.
  • Assess how much risk you are comfortable with. If you are risk averse, gold may not be for you.
  • Diversify over the long term, rather than being dependent one on thing over all others.
    • Being overly invested in one area, rather than being balanced and diversified, will push you further from your long term financial goals.