November 2015 – Q: Is now the time to buy gold?
A: If the U.S. dollar were to collapse or if we experience a global financial crisis worse than what we have just witnessed, gold could likely increase in value. However, market value is not the only important consideration.
The problem is, if such a catastrophe happens it is likely that the government would declare it illegal to possess or trade gold. So what are you going to do with your gold since it is going to be of no use to pay your bills or buy groceries? You could be forced to sell it below its value in exchange for the worthless dollars you were trying to avoid by owning gold in the first place.
That said, if you want to own 10% to 15% of your total assets in gold for a long-term hold and as part of a well-diversified portfolio, that’s okay.
But I maintain that gold will not protect you from a major economic decline. On the other hand, there are other strong buys that I would recommend as part of a long-term and diversified portfolio, including some depressed areas in the energy sector.
Dan Celia has been in financial management for more than 30 years. He works closely with AFA Foundation and can be heard six days a week on AFR Talk (afr.net).
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