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Make gold boring

I see the price of gold is down by nearly $50 from yesterday’s close this morning when I did my routine check of the Kitco website.

Silver was also weaker by $1.49 to $31.76 an ounce.

Who would want to put gold and silver into a retirement plan this morning?

While that is the question that many will be asking, it is the wrong question.

The decision to put one asset or another in a retirement plan should be based on a longer term evaluation.

If you plan to retire Friday, perhaps now is not the time to dabble in gold with your retirement assets.

However, for most of the rest of us, the outlook should be longer term.

The old investment advice emphasizing diversification is important as well as the guideline to put no more than 10 percent of assets into precious metals.

Naturally, when one particular asset is doing well, such restraint seems foolish, but if you had put 100 percent of your assets into gold at its 1980 high of $850, you would have had a long wait, almost three decades, to get 100 cents back on your investment dollar.

Timing is important.

If your retirement time horizon is 20 or 30 years in the future, today’s daily fluctuations probably mean little.

Had you bought gold at the 1974 peak of almost $200, you would have more than eight times your money today.

Had you bought at $850 in 1980, you would have nearly double your money.

Of course, in 1974 there were no precious metals Individual Retirement Accounts. Gold prices are cited just to illustrate perhaps the two worst times to buy. If you had the time, you would have come out whole.

If you had contributed some money each and every year in those years to the present, you would have done far better and you would have known you were diversified as sometimes stocks did well and sometimes bonds and sometimes real estate. And, of course, in the last 11 years it has been hard to beat gold.

If you think gold will be significantly higher when the time for your retirement arrives, it would make a worthy investment and you can ignore today’s price fluctuation.

Just don’t get carried away.

Thinking this way might seem a bit boring, but making gold boring will lead to better decisions.