Suddenly, Gold Isn’t Looking So Solid
By JEFF SOMMER
A RICH man carrying a heavy bag of gold coins set sail on a voyage, but his ship ran into stormy weather. Before it capsized, he attached the bag of gold to his waist and jumped overboard. He sank with his fortune, never to be seen again.
“Now, as he was sinking, had he the gold? Or had the gold him?”
The English critic John Ruskin wrote this parable more than a century ago, but it raises a question that investors may wisely ask today. Many people have tied their portfolios, if not their very lives, to gold. Yet after the wrenching sell-off and burst of unusually high volatility in the commodity markets this month, should gold and other commodities even be a part of a typical investment portfolio?
Although gold is certainly alluring, the answer isn’t simple.