By Jeff Reeves
You’ve seen the ads for gold in your Internet browser or during commercial breaks on cable news. “Gold is the ultimate safe haven,” they claim, or “Gold is the only true currency in the world.”
And in a year like this one, those marketing messages seem to add up. After all, gold prices are up more than 25% so far in 2016 amid plenty of uncertainty — including, most recently, the United Kingdom’s groundbreaking Brexit vote to leave the European Union, which has thrown the economic alliance and its shared currency into turmoil.
But is gold really a must-own investment in 2016, or just a glittery fad?
“The mystique around gold can get a little kooky, actually resembling a fundamentalist religion. 'Gold is the one true currency' is something I hear often, and I roll my eyes every time,” says Charles Sizemore, principal of Sizemore Capital Management in Dallas. “Gold is just a commodity like any other. It’s better suited as a store of value than, say, cattle or corn, because it is imperishable. But it’s still just a shiny metal.”
David Fabian, managing partner of FMD Capital Management in Irvine, Calif., agrees.
“The No. 1 myth is that gold is somehow an ever-present store of value,” Fabian says. “It fluctuates just as much as stocks or any other asset class does.”
In fact, he says his firm currently isn’t recommending gold to clients as part of their portfolio right now in spite of its recent momentum.
“It doesn’t fit in with our more conservative positioning at the moment,” Fabian says, adding, “I prefer not to try and chase it after the 25% run it has had this year.”
Experts: Gold is a tactical trade — not a long-term one
Despite the ever-present marketing hype, a quick look at historical gold prices will give investors a clear window into its fluctuations and risks.