Gold Soars to Record Highs: Should You Sell?

Last Updated Aug 19, 2011 9:23 AM EDT

Gold settled at a fresh nominal high Thursday -- $1822 an ounce (Dec contract) -- as global uncertainty continued to prompt nervous investors to seek shelter in the yellow metal. (The real all-time high for gold occurred in 1980, when it hit $825.50 an ounce, or the equivalent of about $2,300 in today's dollars). We sure have come a long way from the days when I was trading gold options on the floor of the Commodities Exchange of New York (COMEX) -- gold was trading in the low $300's!

Although I got my start on Wall Street as a gold options trader, I've never been a gold bug who feared hyper-inflation and the collapse of the global monetary system. That said, I'm not a huge fan of the money-printing Fed policies executed under both Alan Greenspan and Ben Bernanke. I use gold in my portfolio as the panic trade -- a tiny piece of security in an insecure world.

I usually keep about 5 percent allocated to gold, using exchange-traded funds like GLD and IAU. When the price of gold collapses, I force myself to buy and conversely, when it glitters, I sell to keep the percentages in line with the target allocation. By employing this approach, I don't have to know the top or bottom of a market, whether the dollar is going to get shredded or if inflation is the next bogeyman for Mr. Market -- I just make money throughout the ride.

But if there's some old jewelry hanging around the bottom of your drawer, it's probably a darned good time to unload it and beef up your cash position. Be careful -- the scam artists are out there, as you have probably seen on late-night TV and in pop-up ads online. Here are a few tips about selling Nana's jewels:
  • Check the Better Business Bureau website for an approved list of gold dealers in your area
  • Call at least 3 of those jewelers on the same day and find out each one's rate
  • Got to the store get 3 estimates to determine the best deal
  • Remember: no one will pay for sentiment

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    Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

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