Posted by: coastcontact | May 11, 2013

Investing in Gold

A year or two ago there were non stop ads on radio and television promoting the purchase of gold.  The primary thrust of the messages was that the United   States and perhaps the rest of the world was on the verge of massive inflation.  The only protection of your wealth is gold ownership was the drum beat argument.

I did buy a few thousand dollars of GLD shares.  I bought and sold the shares twice. In that time my net profit was about zero.  I decided sticking to stocks and bonds was a wiser plan after receiving a caution call from the stock broker that handled those trades. That was 2011.

With all the talk about declining value of gold I decided to plot its movement in relation to the movement of the S&P 500 starting January 1, 2013.  My source for the data is the Yahoo Finance graphing tools.  As you can see on the linked graph the S&P 500 has increased in value about 14% while GLD gold shares have dropped about 14%.

What happened to inflation and its effect on the price of gold?  Someone will have to explain it to me.  I do know one man who said the bubble will be bursting soon.

Anyone care to comment?

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Responses

  1. Good posting and good question. Wish I had a good answer for you, but I don’t really know much about trading. Since I make jewelry and ‘sun catchers’ I am aware of how much the price of gold and silver does fluctuate on a daily basis.

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