News
Debt concerns in the United States and Europe continue to bolster demand for gold bullion, leading to record high prices that have now topped $1,600 an ounce.
Gold is up more than 13 percent for the year. With bullion trending upward, TV and online ads increasingly suggest that the precious metal is a solid investment or a quick way to get cash if you have any to sell.
But economists and consumer protection agencies warn that buyers and sellers should carefully review their options before diving into the gold market.
"I think, for the most part, it is seen as a flight to safety and security," said Scott Brown, an economist at Raymond James in St. Petersburg. "I don't like gold. As an asset, gold has no inherent rate of return."
If you do decide to invest in or sell gold, here are some things to consider:
What is driving up the price of gold?
The growing demand for gold and its limited availability is causing the price to rise. With the fragile economic recovery in the United States and the financial troubles in Europe, investors see gold as a safe investment.
How high can we expect the price of gold to go?
It's hard to tell. Gold is a volatile commodity. Some economists think the current gold rush is probably a bubble. "But just because it's a bubble doesn't mean it isn't going to go higher," Brown said.
How should I purchase gold if I want to buy it as an investment?
There are a variety of ways to buy gold, including purchasing gold stocks and funds through a licensed commodity broker; bullion and bullion coins from such places as the U.S. Mint; or collectible coins from coin dealers, banks or brokerage firms.
What are the risks of buying gold?
Because gold is a commodity and subject to price fluctuations, there is no guarantee it will increase or even maintain its value. Beware of scams that lure buyers to a fund, a mining operation or another product that does not exist. Buying stock in a gold mining operation is even more volatile than buying physical gold because investors can gain or lose money with the mine's performance.
What steps should consumers take when selling gold?
Get bids from multiple buyers. Make sure you have a clear offer before selling your gold, especially when selling online. Some buyers accept a seller's metal through an online sale without providing details about how much will be paid. Some buyers receive the gold, melt it and then send the seller an amount less than what the gold was worth. Because it has been melted, the seller may have little recourse.
This article includes information from the Federal Trade Commission, the North American Securities Administrators Association and wire reports. Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332.
Loading...
