Articles on the low price of gold can be interpreted as saying gold is a bad investment. That’s not what I take from them. My view is that, if we look at asset class pricing, gold is relatively cheap while stocks and bonds are very pricey on a historical basis.
The one stock market dictum that everyone knows—and very few obey—is to buy low and sell high. Right now, stocks and bonds are high and gold is low, but the media is touting financial assets like stocks and bonds and is down on real assets like gold.
Should You Buy Gold?
Probably not, unless it’s part of a thoughtful investment strategy. Certainly don’t buy it now because it’s cheap, because it could get a great deal cheaper. By the same token, don’t ignore it because it's cheap.
The thing to think about as you read the paper is whether the prices we see today accurately reflect current values and future trends. Underperformers are often tomorrow’s stars, and the reverse holds true. At some point, every asset class will outperform, and the prudent investor will keep an eye on all of them in order to take advantage of that.
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA. He is the primary spokesperson for Commonwealth’s investment divisions. This post originally appeared on The Independent Market Observer, a daily blog authored by McMillan.