Gold prices were at a record high today, hitting more than $2,100 an ounce at one point during the trading day in Asia.
It’s dropped a bit since then, but remains pretty high. In fact, gold prices have been climbing for weeks as investors flock to the “safe haven” amid global uncertainty. That’s because many default to gold when the financial outlook is a little iffy.
When gold prices get this high, financial consultant JeFreda Brown knows to get ready for the questions.
“Ironically, just yesterday, one of my church members came up to me and he was asking me about what do I think about investing in gold?” she said.
Brown is CEO of Xaris Financial Enterprises in Alabama, and says she told them what she told me about gold.
“That it’s an alternative investment and historically, of course, it has been a really good hedge against loss,” she said.
On top of that, said Brown, there’s a lot of messaging and ads for gold products piquing consumer interest.
Jonathan Rose, CEO of Genesis Gold Group a precious metals dealer, said there are gold exchange traded funds (ETFs) and investments in mining companies.
“And then there’s owning the physical commodity, something that you hold in your hand, whether it be gold coins, gold bars,” he said.
With its subtle glow and the allure of those shiny coins and bars, gold kind of lives in the human psyche as something precious.
“So gold is one of those assets that represents fear when there is not a lot of faith in the financials, but gold is one of those things that we appreciate,” said Juan Perez, director of trading at Monex USA.
Perez says this latest jump in prices is mostly due to investors in Asia looking for that safe haven.
But Campbell Harvey, a professor of finance at Duke University, said gold isn’t much safer than other investments, or much of a hedge against inflation.
“Gold is volatile, it’s as risky as investing in the S&P 500,” he said.
Harvey said after looking back at more than 2,000 years of data on gold prices, “it’s naive to think that every single time that gold will provide some protection in the time of economic uncertainty, or even a crisis.”
Plus, he said, as with any investment, you never really want to buy at the top, wherever that may be.
