Gold Soars to Record Highs: Should You Sell?
Gold settled at a fresh nominal high Thursday -- $1822 an ounce (Dec contract) -- as global uncertainty continued to prompt nervous investors to seek shelter in the yellow metal. (The real all-time high for gold occurred in 1980, when it hit $825.50 an ounce, or the equivalent of about $2,300 in today's dollars). We sure have come a long way from the days when I was trading gold options on the floor of the Commodities Exchange of New York (COMEX) -- gold was trading in the low $300's!
Although I got my start on Wall Street as a gold options trader, I've never been a gold bug who feared hyper-inflation and the collapse of the global monetary system. That said, I'm not a huge fan of the money-printing Fed policies executed under both Alan Greenspan and Ben Bernanke. I use gold in my portfolio as the panic trade -- a tiny piece of security in an insecure world.
I usually keep about 5 percent allocated to gold, using exchange-traded funds like GLD and IAU. When the price of gold collapses, I force myself to buy and conversely, when it glitters, I sell to keep the percentages in line with the target allocation. By employing this approach, I don't have to know the top or bottom of a market, whether the dollar is going to get shredded or if inflation is the next bogeyman for Mr. Market -- I just make money throughout the ride.
But if there's some old jewelry hanging around the bottom of your drawer, it's probably a darned good time to unload it and beef up your cash position. Be careful -- the scam artists are out there, as you have probably seen on late-night TV and in pop-up ads online. Here are a few tips about selling Nana's jewels:
- Check the Better Business Bureau website for an approved list of gold dealers in your area
- Call at least 3 of those jewelers on the same day and find out each one's rate
- Got to the store get 3 estimates to determine the best deal
- Remember: no one will pay for sentiment
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