Got gold fever?  Maybe yes, maybe no.

Gold, gold, gold…  It’s in the news, the papers, home parties, radio, TV – everyone is talking about how high gold prices are today.  Does that mean it’s a good time to buy? Sell? Invest?  Before you jump…be sure you know why prices have been spiking and answer the key question:  can it last?

Here are some facts:

• The present focus on gold came as the global economy indicated troubles. The first gold rush dates back to 1848 when the frenzy developed upon the discovery of gold in California and population ballooned.
• The second Gold Rush was from 1974 – 1980 as inflation soared.  That was the first time since the Great Depression that US households were allowed to invest in gold.  Prices at that time rose from $100 to $850.  In the last several months gold has been hovering at $1100 an ounce.
• The gold frenzy of 2009-10 could be the referred to as a “third Gold Rush.”

While some economists suggest that gold could eventually climb to as high as $5000 an ounce, that presumes inflation and consumer prices rise.  To date that’s not the case. Since 1974 inflation has shown a 4.2% gain, the S & P gained 11.5% and gold showed a gain of 5.1%.

Some “smart money managers” are buying gold.  There are several ways to invest:

• Gold coins can be bought through the mint at a 33% mark up. Since the government sees coins as collectables a 28% tax is assesses on any profits from the sale of coins (only 15% tax is placed upon other types of capitol gains).
• Gold-mining stocks offer a diversified gold mutual fund.  The warning here is that these stocks are related to the Dow and fell with the market even though gold rose.
• Gold futures can be bought through a broker.  Since these are leveraged bets they could result in major losses even when gold drops marginally.

Gold has had its ups and downs and probably will continue.  Unless you are in the business or have the money to risk it’s better to view gold as a luxury item.   Because gold will always have value, buying jewelry allows you to accumulate material items that will retain value while you enjoy them!