Don’t jump on the gold wagon!

Watch out, here comes another fad, investing in gold. As gold prices reach record highs, investors are being enticed into gold-related investments. Message today: be cautious about jumping on the gold bandwagon.

Gold is not necessarily a safe investment and it is definitely not foolproof. Prices fluctuate even more than today’s stock market. It is a commodity and like any other commodity, its price can change dramatically. As well, gold prices also move in reverse of stocks and bonds, so when stocks are down, gold can become a tempting investment.

There are all sorts of ways to invest in gold, including buying the actual gold or making gold-related market investments in mutual funds, exchange-traded funds and futures glossary icon, as well as shares of gold mining companies. As an investor, you need to examine each of these opportunities, do your homework and determine what you need to know before deciding to invest.

You also need to be aware of gold investment scams. For example, watch out for the scheme in which someone offers to sell you actual gold bullion and then keep it for you in a “secure” vault with a promise to sell it as it gains in value. Usually, the gold bullion doesn’t even exist. In another example, a company will encourage you to cash out of your poor-performing investments to purchase gold, which may be nothing more than “fool’s gold.”

The soaring price of gold might look like a great way to recover your stock market losses. Remember, it’s a Wild West out there and there are plenty of dangers to watch out for as a gold investor.