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Gold bugs beware

By Dian Vujovich

I see them everyday—the folks at various corners in West Palm Beach holding pointy-shaped signs with words directly those driving by where they can sell their gold jewelry. If you’re an investor of this precious metal, it might be more rewarding to follow those signs and sell that gold broach you’re not wearing any longer than invest in the stuff today.Might be.

Bubbles have always been a real part of the investment arena starting with tulips and the Dutch tulip bubble back in 1637. Much more recently, the dot com and real estate bubbles have shown anyone wanting to learn that there’s a lot of truth in the Wall Street adage, “Trees don’t grow to the sky”.

Even with experience and history behind us, people forget. Particularly when it comes to anything having to do with money. Think that has to do with the greed gene that science may not have identified yet everyone knows exists.

And that brings me back to gold. The wonderful metal that some of the finest jewelry is made of and many electronic kinds of equipment couldn’t do without.

Talking with a gentleman at a financial program for seniors the other day, he said he was thinking about buying gold. Humm.

Now I know some in the jewelry business who think that gold prices will soar to 2000 bucks an ounce and beyond, and investment pros who believe the best time to have purchased it was 10 years ago.

From a recent Wall Street Journal story: “The time to buy gold was in 1999, not 2010,” Harvard professor Niall Ferguson tells The Wall Street Journal—though he added that momentum might still drive it higher. Others will tell you “the smart money got out of gold months ago.” But then people have been saying that for years.”

On May 28, 1999, gold was selling for around $268 an ounce. Today it trading around $1213 an ounce. That would be a 4-bagger if Peter Lynch were giving investment advice. Price increases like that are enough to make some investors grateful and take their profits.

I’m hoping that you’ve been investing in gold long enough to have your investment increase in value handsomely.

I’m also hoping that you’ll take the time to read the WSJ story. It includes some interesting charts plus points out that the smart money often get out of bubbles too early and that the futures market is predicting gold will rise only slightly over the next few years.

Read the piece at: http://tinyurl.com/2vlru54.

To read more articles, please visit the column archive.

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