NEW YORK (TheStreet) -- TheStreet's Lindsey Bell is with Oliver Pursche, president of Gary Goldberg Financial, discussing what has happened to gold since the FOMC announcement on Wednesday and where investors may find value in it.
With gold at its lowest level in over two years and below that key psychological level of $1,300, many are wondering if it's time to head for the hills or if this is a bottom, according to Bell.
However, Pursche says that right now it's like trying to catch a falling knife. But he also pointed out that it's been a rough time in gold for the past couple of months, not just the last two days.
His suggestion to investors is to think: What is the purpose of owning gold in my portfolio? For some, he has the answer, adding that it's a long-term inflation hedge.If that's what it's being used for, Pursche believes now is a good time for buyers to step back in, although he does acknowledge that the metal could go lower short term. He pointed to the continued quantitative easing from the Federal Reserve, as well as further involvement from European central banks and the Bank of Japan as reasons that long-term inflation is worth hedging against. Pursche added that SPDR Gold ETF (GLD) or iShares Gold ETF (IAU) are fine for playing the long-term rise in gold, citing the low costs of the exchange-traded funds. He concluded that a 2%-4% portfolio allocation is appropriate and that investors can expect annual returns of 6%-8% from the metal over the long term. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV