Gold Is Not The Only Investment – But You Should Hold Some

There is No Safe Haven – But You Should Still Own Gold

By  John Stepek MoneyMorning on 9 August 2012

That doesn’t mean that gold is the only thing that should be sitting in your portfolio. It would be stupid to have 100% of your money in gold, just as it would be stupid to have all of your money in any single asset class.

And gold is certainly not as cheap as it was 10 or 11 years ago, when it was self-evidently undervalued. As Tasker puts it, ‘some assets offer more value than others’. He cites stocks in Japan and Europe, both of which I’d happily add to my portfolio just now.

Tasker also notes that US house prices are very low relative to the price of gold. Again, if you’re going to consider buying property somewhere in the world, I’d agree that the US looks more promising than most.

But I’d also hang on to gold. My view is that 5-10% is about right, but your exact allocation would come down to your own circumstances. It’s there to protect you against extreme financial risks, and there’s still a good chance that we’ll see more of those in the near future.

Also, I’d keep a close eye on the gold price over the coming months. As my colleague Dominic Frisby has pointed out on several occasions, gold’s bull market has followed a fairly reliable pattern of hitting new highs, then consolidating for periods of around 18 months.

The last peak came in late summer of 2011. So we’re not far off the 18-month mark now. If the pattern holds, 2013 could be a very profitable year for investors in gold.

John Stepek
Contributing Editor, Money Morning

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