Gold recently broke two records: reaching a historical high of more than $1,900 and a historical drop of more than $100 in a single day.
So it is no small wonder that a lot of investors have their eyes set on the precious metal; hoping to hop on to the market while the money is down and then sell off when it goes up again.
The problem here is that people who put all their money into gold could find themselves in a nasty jam – just like what happened as early as three years ago and as far back as three decades ago.
“We are seeing the exact same behavior at the height of the tech bubble, housing bubble and the Japanese Nikkei bubble,” says Wells Fargo Private Bank deputy chief of investment Erik Davidson.
“People want to believe there is a sure thing. There is no such thing as a sure thing,” Davidson adds – which is pretty sound advice.
What makes things worse is that frauds know that a lot of people are running toward gold, and they are taking full advantage of that fact.
Both the North American Securities Administrators Association (NASAA) and the Financial Industry Regulatory Authority (FINRA) issued warnings regarding gold-related scams – especially since these scams target investors that fear an economical failure of biblical proportions.
“If you’re really worried about the world ending, buy peanut butter and beef jerky,” joked Davidson.