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4 Things Older Investors Need to Know About Gold


On Tuesday, gold hit a record high of $1,782, up 25% year-to-date. For some, that signals that we’re in a gold bubble.  But others, including J.P. Morgan Chase Bank, say that gold may still climb higher.  The reason: Gold tends to do well during inflationary periods and economic downturns, according to’s “Gold’s Newest Believers” story — both possibilities for the U.S. in coming months.  With all the media speculation on the topic, older and younger investors alike are wondering whether now is the time to buy (or sell). “I’m getting a lot of calls about gold from all age clients,” says Andrew Feldman, president of AJ Feldman Financial in Chicago.

But while younger investors can afford to take more risk investing in gold, retirees and soon-to-be retirees have less room for error as they have less time to recover from losses. So, asked a few advisers their thoughts on gold and its place in older investors’ portfolios.  Here’s what they told us.

Don’t get caught up in the frenzy. The current gold frenzy is “very driven by emotion,” warns Paul Baumbach, a financial adviser at Mallard Advisors in Newark, Dela. — so it’s important not to get swept into the “buy, buy, buy” frenzy that’s happening right now. So, for the most part, retirees and soon-to-be retirees “should keep to their long-term strategy,”says Feldman.  First, talk to your financial adviser to ensure that you have the right asset allocation and diversification in your portfolio.  Once that long-term strategy is in place, chat with him or her about adding (or subtracting) a little gold.

Keep your gold exposure at a minimum. To be sure, gold can be a part of your long-term strategy, experts say. But you don’t want to own too much.  Feldman usually limits retirees and older investors’ purchase of gold to up to 2% of their total portfolio. “This way, if gold drops significantly, it won’t kill their retirement,” he says. Some advisers are a little more lenient: Baumbach recommends a maximum of 5%, but warns that even this 5% is still “a gutsy bet.”

Have an exit strategy. “If more than 5% of your portfolio is made up of gold, it’s time to figure out an exit strategy,” says Lance Reid Scott, president of Bay Harbor Wealth Management in Baltimore.  First, don’t panic and unload all of your gold at once; instead consult with your financial adviser on how to do it strategically, Scott says.  “Systematically selling your positions over a set period of time should help you get competitive pricing, rather than trying to time the market for a good day to sell,” he says.  And even if you’re buying gold now, you need an exit strategy. To ensure one going forward, Scott says that if you buy gold, choose to buy things like gold ETFs, which can easily be sold and offer exposure to gold in a variety of forms like bullion and mining, rather than, say, gold coins, which can be hard to unload.

Know your current gold exposure. Many investors already have exposure to gold even though they don’t realize it, Feldman says.  For example, Newmont Mining Corporation and Freeport-McMoRan Copper and Gold are part of the S&P 500, so investors that have exposure to this index already have gold in their portfolios, he adds.  To make sure that you don’t inadvertently own too much gold, go through your entire portfolio with your adviser before adding more gold.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.