Will Gold Surge?
Q I read in Business Insider that “Gold could explode up to 80% to $3,500 in the next two years” — is that true? Should I be investing in gold? — W.Y., Sacramento, California A Not necessarily. The headline you read reflects the opinion of one financial professional, and while plenty of financial pros recommend gold, plenty of others don’t. Warren Buffett, for example, isn’t a fan, explaining that while it can do well in periods of economic uncertainty and is favored by those afraid of other investments, it has two main drawbacks: It’s not that intrinsically useful, and it doesn’t produce value, as would a company, a farm or real estate. He would rather remain invested in businesses that are generating earnings over time — even gold mining companies.
Gold may well hit $3,500 per ounce by 2022, but then again, it might not. It has a history of being volatile, so even if it does soar, it may pull back sharply, particularly when the economy strengthens and stocks start looking especially attractive. For example, gold topped $1,900 back in 2011, but then fell to nearly $1,050 in late 2015. If you want to add gold to your portfolio, don’t go all in.
*** Q What’s a stock’s “float”? — A.D., Des Moines, Iowa A A company’s float is the number of its shares that are available for the public to trade. (It’s not the total number of shares that exist — “shares outstanding” — as some may be held by institutions, or by insiders, with their trading currently restricted.)
Companies with small floats can be extra-volatile, since demand from would-be buyers may be far greater than the available supply of shares, sending the stock up sharply — or vice versa. Want more information about stocks? Send us an email to foolnews@fool.com.