Why Gold Bugs Bug Me and Should Bug You

[image error] This is perhaps the stupidest and most egregiously misleading ad I've ever seen. Yes it's true that gold has had a very strong run in the last two years -- but with equally strong and gut-wrenching volatility. Gold is down 10% from its December peak and, during the 2-year period the ad touts, gold prices suffered several multi-digit downturns. It is not for the faint of heart.

But what really gets me is the suggestion that anyone could have had their entire IRA filled with gold. It's absurd. How many people would click on the ad if, instead of gold, it were touting the 75% return that you could have experienced if your IRA was filled with Apple or the 95% return delivered by a portfolio filled with Ford. No one in their right mind invests -- or should invest -- like that. But that is exactly what this gold bug would have you do.

I am not a big fan of gold, primarily because I just don't understand its fluctuations. But even the more temperate proponents of gold suggest that investors limit their exposure to a small position in the range of 2%-5% of your portfolio. Gold is an inflation hedge. It is not a long-term buy-and-hold investment.