Wisdom of buying gold as an investment

Is buying gold as an investment a wise choice?

Looking at the spot price of gold, and without looking at the trend, many people would tell you that gold is too expensive.

Indeed, even George Soros, the famous investment guru, had sold off his gold holding.  He even went to the extent of saying that gold was the ultimate bubble.

At the point when news leak out that George Soros had sold almost his entire gold holding, the highest gold price was just $1,450.

Since then, just a couple of months later, the spot gold price exceeds $1,700 today.

Do you consider buying gold as an investment as a wise choice?

With hindsight, the answer is definitely yes.

Looking forward, the answer is unclear.

The current price of gold per Troy ounce is due to fear.  When people are fearful, they are not rational.

A series of bad news rock and scared the world, even the non-investors.

It is not everyday that we see the US government max out their credit.

It is not everyday that we see a reputable rating agency, in this case, Standard and Poor cuts the rating of US Treasury Bond from the ultimate AAA to a rank lower.

The governments of the world, and the news media, are adding oil to the fire.

The most devastating and strongly worded editorial comments come from Xinhua, the official news agency of China.

The stock markets everywhere react negatively.

You can hardly see a stock market that remains intact.

While money flows out of stock market, gold and silver benefit.

Gold price has increased from $1,600 per Troy ounce to $1,700 per Troy ounce in a matter of weeks.

What about now?  Are you planning on buying gold as an investment?

Logically, you should not buy gold at this time, since gold price has reached $1,700.  It is an unseen peak.

However, in the investment world, the people do not always act logically.

Fear is an emotion that prevents people from thinking.  That is why gold price climbs to new high whenever fear grips the world.

If you want to sink money for buying gold as an investment, you have to watch the asset very closely.

You have to read the newspaper and check the movement in the stock markets to gauge the sentiment of the people.

Once you see money flowing into stock markets, you should sell off part or all of your gold holding.

Gold price will definitely drop when people start to think.

It may not fall below $1,600, since this commodity is rather stable.  It just cannot stay on top all the time.