The luster seems to be dimming for gold as an investment now that the price of the precious metal, prized by such financial wizards as King Tut and Glenn Beck, is down 17 percent this year to around $1,400 an ounce, and down 26 percent from its August 2011 high of $1,895.
Of course, you're still up on gold as long as you bought it before December 2010. If you bought it at the beginning of the Great Recession in January 2008, when an ounce went for $846.75, you've gained about 68 percent, as opposed to the S&P 500, which gained 9.2 percent.
How's your crystal ball working?
The problem with gold for individual investors is that you need to be able to predict the end of the world, or at least to predict when everyone else is going to predict the end of the world. Gold makes a great hedge against runaway inflation and financial disasters simply because, well, lots of folks believe it makes a great hedge against runaway inflation and financial disasters. Gold is pretty much the Tinker Bell of investments -- all you have to do is believe.
So, that part is easy. The time to melt down grandma's gold earrings is when everything else is melting down, too. But when do you sell? Ideally, you sell as soon as people start to figure out that the world isn't going to end -- which is a tough call to make. There can be many signs of the apocalypse -- you know, lakes of fire, zombies, another installment of "Deuce Bigalow: Male Gigolo" -- but what are the signs of the non-apocalypse? Maybe that the toaster didn't burn my bagel this morning?
Sinking like a lead duck
If you don't stop listening to CNBC on the shortwave and come up out of the bomb shelter in time to sell your gold, it drops like, well, a brick of gold. The last big gold spike happened during the oil crisis of the late 1970s/early 1980s, when gold hit more than $800 an ounce. The world didn't end back then, so gold eventually dropped to under $400 and didn't reach the $800 level for another 27 years. Over time, gold lags the stock market badly and barely beats inflation.
If your heart is set on investing in gold before the next end-of-the-world-as-we-know-it, try these alternatives:
The golden ring: Getting and staying married means you'll live longer, make more money and have someone to fool around with in the bunker.
The golden oldies: Motown hits never go out of style. Plus, you're going to need to play "My Girl" to get your shelter sweetie in the mood.
The golden rule: Be nice to others, because, if the zombies do attack, someone will gladly share their Spam with you.
(Brian J. O'Connor is an award-winning columnist for The Detroit News. Contact him at firstname.lastname@example.org.)