Gold continues to hit new all-time highs. This past week, gold went past the $1,000 mark for the first time ever. Much of this increase is due to the weakness of the American dollar. The dollar is in free fall against other currencies. Although it is hard to fight the trend right now as the dollar continues to plummet, gold could very well be in for some hard times in the short-term. Gold is an excellent hedge against fiat currency (paper currency backed by nothing). In times of high inflation and uncertainty, gold is a great thing to have. You should always have some gold and/or gold-related investments in your portfolio.
You should be warned that gold may not do well in a recession. If the dollar continues to fall, then gold will probably continue its run. But it appears that we could be in for a deep recession, where cash will be king. If you hold gold for the long-run, then don’t worry about it. But we could see a sharp drop in the gold price with a severe recession. Don’t get caught speculating with gold or gold related investments if you are not prepared to lose money. Gold is a must for diversification and should be a part of your portfolio. But standing alone, speculating on gold right now is a very risky business.