When the Glitter Is Gone From Your Gold

BOSTON (MainStreet) -- Months ago, amid global economic uncertainties, the question asked by all levels of investors was "How do I buy gold?" Now, with prices of the precious metal stabilizing and falling, the question they may start to ask is: "Should I sell it?"

With both hard assets and specialized funds to choose from, the answer to the first question was simple enough. When and how to exit that position is the trickier part.

Many experts are expecting the gold bubble to burst. But knowing exactly when, and how, to sell your investments before that happens isn't always easy.

Despite the recent spikes, gold has traditionally maintained steady pricing. From 1833 through 1968, it never broke beyond $39 an ounce (not adjusted for inflation). For the 25 years between 1981 and 2005, it ranged from $271 an ounce at its lowest to a high just shy of $445. The average price then rose from $603 in 2006 to $872 in 2008 and $1,224 last year.

In May, Mike McGervey, president of McGervey Wealth Management in North Canton, Ohio, shifted investments out of gold. His strategy is to treat gold, in whatever investible form it may take, the same as any other security -- having a solid buy-and-sell discipline based on technical analysis.

The price stability gold has had in previous decades enhances the possibility of a bubble burst, with gold reverting quickly back to a more traditional price point.

"What's uncertain is if it has any more room left to grow," McGervey says.

Based on his analysis, McGervey saw the need for a post-gold strategy. For many investors, however, there is something -- for want of a better tern -- magical about gold, a thought that it's a magic bullet to protect you from uncertainty, inflation or even economic apocalypse.

An investor might buy gold for all the right reasons, but a certain hoarding mentality can take hold. The European debt crisis is worsening by the day and, in the U.S., there have been no real moves to rein in the deficit, so there may still be room to grow -- which makes it psychologically harder to exit a position that it might be with a typical stock or bond.