Gold-As-Insurance Meme Spreading, Or Money Magazine Bends

Walter Updegrave, a senior editor with Money Magazine, fielded this question that more than a few of us would like to be in a position to ask:

Question: I took some money from a maturing CD and bought gold when it was selling for around $800 an ounce. How can I know when it's a good time to sell this gold and reinvest elsewhere? And what should that elsewhere be? --Christine, Cocoa Beach, Florida

His answer follows the standard asset-allocation template: it's better not to chase investments, swayed by the hope of getting into the next high performer. A wiser approach is to diversify using an asset-allocation strategy, putting money into fixed percentages of assets and rebalancing once per year. He says that the allocation model can include gold, in the standard 5-10% insurance ration.


I mention this answer in part because Money magazine got some notoreity in the goldbug world for dumping on gold as an investment. Perhaps editorial policy has changed a little in the interim.