Gold!

Yes, gold is over $1 600. Do I have to buy now? Well, consider this:

• Most novice investors buy an investment when it has reached its peak, and sell when it is at its bottom. This is a better way of losing money than gambling!
• Gold is not even back to the inflation adjusted level it was at the all time high in 1980. So, if you bought at the top in 1980, you are still making a loss on your investment on an inflation adjusted basis after 31 years.

For the last 51 years gold was an investment where if you bought it at the right time, you made mega bucks, but if you bought it at the wrong time, you lost mega bucks. You also do not get any interest or dividends when buying gold.

So, if you feel lucky, buy gold when you get the urge. Just remember that you might have to wait for 30years to get your money back, without any return!

If you buy a portfolio of shares on the other hand, there are also times where you have to wait for 10 years to get capital growth on an inflation adjusted basis, but at least you receive some dividends while you wait.

In most instances, you can determine the fundamental value of a company. Gold is driven more by sentiment than anything else. After everything is said, understand that gold has had a fantastic run over the last 5 years on the back of financial uncertainties in the world. If you buy now, make sure you can wait for a very long time before you have to sell again.

Lastly, if you decide to go ahead and buy gold, rather buy the ETF on the JSE called Newgold, rather than coins or gold mining company shares.

Happy gambling!