Skip to main content

New trend for gold?

Checking the Kitco website this morning, I see gold is down $2.70 to $1,229.10 an ounce.

We are off the high for the year, which was very nearly $1,280 in the early part of March.

Still, gold is up $168.80 or almost 16 percent since the final close in 2015. That is quite a gain.

For longtime followers of the gold market, the question now to be asked is will the gain of early in the year be given back as it was in 2015 and in 2014 and in 2013?

To be fair, in 2013 there really was no early run higher, just a relentless downward movement punctuated by the big $200 drop in just days in April.

Three bad years can be ignored because history is not a mandate. Markets fluctuate. Each year can see a different result.

If that were not true, gold would either be at $10,000 now from a relentless up trend or $100 from a never-ending downtrend.

What 2013-2015 should remind us of is the lack of certainty and the need not to go overboard on one side or the other.

If it looks like you will need some money this year from your gold holdings, cashing in when there are gains on the table is probably wise. It was certainly the thing to do 2013-2015.

If you are thinking of buying more, try dollar cost averaging. Divide the sum into monthly or quarterly pieces. This mitigates the impact of strong swings one way or the other.

If you are absolutely convinced gold has nowhere to go but up from today, keep your investment within sensible bounds.

Bullion in all its forms should be no more than 10 percent of your investable funds.

Gold could have a strong year. The world is in turmoil. The United States has a presidential election.

And of course, the Fed is the Fed. Its stated policy is inflation of 2 percent forever. That assures a higher gold price in the distant future.

But there will be daily fluctuations. Don’t be stampeded by them.

I could have written the investment truisms that I have just written here back in January of 1980. Gold is higher now than the $850 it peaked at then, but it was a long wait. That’s why going overboard is never a good idea.

Since it is a long wait, why not buy gold in the form of collectible coins? A 19th century Liberty Head gold $20 is much more fun to own than a standard one-ounce American Eagle.

Find the right coin dealer and see what he has to offer you.

Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."

• Like this blog? Read more by subscribing to Numismatic News