This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $92.72 -0.56%
FB $119.49 1.43%
GOOG $711.12 1.38%
TSLA $214.93 1.61%
YHOO $37.23 0.79%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs