What to Do with Gold?

April 07, 2009 | By: Investment U

It’s easy to see how commodities, equities, real estate, bonds, and even treasuries have been pushed down by our bear market - and even easier to see how they could spring back. Gold is a different story.

It leaves experts scratching their heads, and the “talking heads” embroiled in discussion…

On one side, it has run up during the downturn. On the other, it hasn’t really run up enough. And we’re not even going to get into the arguments on its inflation-adjusted value, or oil-adjusted value.

Gold is where investors will be hiding their money until the markets follow through on this rally or the dollar gains in value. If we’re coming out of the woods, gold will continue to trend down; if the markets move even lower, look to see a second spike in gold prices.

So what should a cautious investor be doing with their gold allocations? Nothing.

At least right now.

As of Monday morning, gold had dropped another 2% and now sits at 878.70 an ounce. It’s impossible to know where it will go in the short-term. And while our asset allocation strategy includes gold, it doesn’t recommend buying when there is too much potential to be purchasing at 10-year highs.

An investor should be taking calculated risks, and right now there just isn’t enough convincing evidence to make a concrete decision either way.

But that doesn’t mean there aren’t options if you feel differently.

The SPDR Gold Trust ETF (NYSE: GLD) is an easy way to put your gold beliefs to the test. You can go long, short, and even option this ETF. For the numerous gold bugs and anti-gold’ites this is an easy way to put your money where your mouth is.

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