Transcripts

"Money File"-Jason Zweig, Personal Finance Columnist at the "Wall Street Journal"

SUSIE GHARIB: In the "Money File" tonight, why gold doesn't always glitter. Here's Jason Zweig, personal finance columnist at the "Wall Street Journal."

JASON ZWEIG, PERSONAL FINANCE COLUMNIST, WALL STREET JOURNAL: With stock markets being blown to bits worldwide, should you move your money into the safe haven of gold? Many investors are doing just that, but there are a few things you should know first. Gold is supposed to go up when stocks and the U.S. dollar go down. It's also supposed to glow more brightly when the economy goes dim. But just look at what has happened lately. Let's say you bought gold in March, when you were worried about the exploding U.S. budget deficit, the erosion of the dollar and the collapse of the global financial system. Many pundits were predicting that gold would go to $2,000 per ounce. You paid just $1,000 an ounce. Since March, two of America's top five investment banks have gone under. The Dow has lost roughly a third of its value. Housing prices have continued to plummet and the government has committed roughly $1 trillion to bail out the financial system. Every one of your fears has come true, and then some. So is gold at $2,000 an ounce yet? Far from it. Gold is now trading well below where it did in March. The lesson here is that you can be 100 percent right and still lose money if you pay too much for an investment in the first place. The best time to buy gold is not when everyone is going ga-ga over it, but when nobody wants it. Nothing can be trendy and a safe haven at the same time. I'm Jason Zweig.