Gold is risky, but it could pay off big over the next few months
by Jeff Reeves
I am a big believer in the barbell approach to investing. That is, I have a big portion of my money in sleepy index funds, and buy-and-hold dividend payers and value plays, and a smaller portion in rip-roaring trades that I hope work out in short order.
And one admittedly risky trade that could pay off big-time in the coming months is to go heavily into gold.
Now, first, a disclaimer: I have written regularly about the pros and cons of buying gold at certain moments in time, and always try to stress that I am agnostic about the precious metal. I think it’s preposterous to presume that gold is a “safe haven” given its incredibly volatile price history; gold is down roughly 30% from its peak about five years ago even as the S&P 500 SPX, +0.64% has surged about 85%. But at the same time, I think it’s ludicrous to write off gold as some tinfoil-hat investment or an all-out gamble akin to investing in microcap stocks.
Gold, simply put, is an investment. And I try to view it as such, based on the current macro and market conditions.