1. Solid gold is not always solid. The price of bullion peaked in September 2011 at nearly $1,900 an ounce. But gold recently hovered just below $1,400 an ounce, and many analysts predict that the price will fall to $1,200 to $1,300 by year-end. Among the factors that could continue to weigh down gold: a strong dollar, a surging stock market and tepid economic growth around the world.

2. Defense, defense. Think of gold as a hedge against unexpected, catastrophic financial events. For example, the credit downgrade of U.S. debt and worry about a Greek default fueled a 44-percent rally in gold prices in the first nine months of 2011.

3. A little bit goes a long way. Many experts say a small exposure to gold -- from 1 percent to 5 percent of your portfolio -- can be a good long-term portfolio diversifier whether prices move up or down. That's because gold tends to move out of sync with stocks and bonds.

4. You could start your own treasure chest. Consider buying the actual metal in one-ounce coins, such as American Eagles, says Alec Young, global equity strategist at S&P Capital IQ. "Buy through a reputable dealer, one that's been around for 30 years and that's listed with the Better Business Bureau," he says. You'll pay a premium when you buy and sell the pieces. But Young says you shouldn't pay more than a 5-percent to 6-percent premium to spot-gold prices when you buy, and you should accept no more than a 1-percent to 2-percent discount to spot prices when you sell. Store the coins in a safe-deposit box at the bank.

5. Or invest in an exchange-traded fund. Many so-called gold bugs have chosen to buy shares in an ETF, such as iShares Gold Trust (symbol IAU), which tracks the price of gold by buying bullion. Note that the IRS considers gold a collectible and gives it special tax treatment. When you sell your shares, your gains will be taxed at your ordinary income rate, up to a maximum of 28 percent, if you've held the shares for more than a year. If you sell your shares within a year of buying them, your profits will be taxed as ordinary income, up to 39.6 percent.

6. Gold stocks are riskier. Prices of gold stocks are often more volatile than the price of the metal itself. For example, over the first four months of the year, the price of bullion declined 16 percent; by contrast, an index of the biggest U.S. gold mining stocks plunged 36 percent.

(Nellie S. Huang is a senior associate editor at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit http://www.Kiplinger.com.)