CBS MoneyWatch quotes BFS’s John Gilbert about gold investing

CBS MoneyWatch recently included expert advice from BFS’s John Gilbert in a series of articles that explore the contours of the gold market for investors at a time when gold prices are hitting record highs.

A BFS senior research consultant, Gilbert drew on his 43 years of experience in the investment industry to provide guidance on a number of questions relating to gold investments.

In one article, Gilbert shared his thoughts on whether or not to diversify gold assets:

Gold assets often rise and fall with the price of gold bullion, so investors can get exposure to gold with various asset types. Still, it’s wise to exercise caution, as some assets may be more risky, as John R. Gilbert, the executive vice president at the investment firm Bradley, Foster & Sargent, points out. “Gold investments generally have a high covariance with the price of gold bullion itself. But most investors should avoid highly volatile vehicles such as exploration stocks.” While gold mining stocks can be lucrative, they come with significant risks that may not suit your risk tolerance level. In that case, you might balance your gold assets with more stable options.

In another article on what to avoid when investing in gold, Gilbert discussed his knowledge of gold futures, exchange-traded funds (ETFs), and early-stage gold company stocks.

For average investors, particularly retail investors, an ETF tied directly to the price of gold is the best choice, John Gilbert, executive vice president at registered investment advisor firm Bradley, Foster & Sargent, says.

“A liquid option, for example, is the GLD ETF,” Gilbert adds…

Another option that some experts say to avoid is the stocks of early-stage gold companies.

“Most investors should avoid the stocks of exploration- or development-stage companies entirely, or at least limit the size of the purchase to a small amount (one or two percent of one’s portfolio, for example),” says Gilbert.

A third article sought to answer the question of when to buy or sell gold. When it comes to interest rates, Gilbert shared with CBS MoneyWatch:

“On a short-term basis, buying gold when the Federal Reserve is cutting rates and selling when they are raising rates may be more successful than the opposite. But speculating on macro events is prone to failure. If one is to own gold at all, it is best done as part of a longer-term portfolio structure. Any investment approach should consider both one’s financial position and risk tolerance,” says John R. Gilbert, senior research consultant at Bradley, Foster & Sargent.