Gold has had a tough 2012 thus far — its weakness has continued into the second quarter and isn’t expected to fade in the third. The metal’s middling is especially notable considering its success over the past decade.
Prices are still hovering around $1,500 to $1,600 in the past couple months (they sit at $1,620 as I write this) — a drop from the $1,900 high during last year’s “gold rush.”
For more proof of the little yellow metal’s woes, just look at the SPDR Gold Trust (NYSE:GLD), which has dropped nearly 6% in the past six months and is about flat for the year.
Warren Buffett, for one, has never been a fan of gold, because it can’t actually be used for anything. As he explains:
“(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
Nevertheless, gold historically has been a hedge against inflation and a safe haven during times of panic, making it a valuable part of many diversified portfolios. But, unless you’re an Olympic athlete, there’s no reason you have to always go for the gold. In fact, there are other ways to diversify your holdings away from gold while staying in rock-solid hard asset investments.