Gold is a safe investment but not always profitable

(WBRC/WMBF) - If you listen to talk radio, watch cable news, or surf any news-related website, you've probably seen or heard them - ads telling you to buy gold.

"Gold's had a big run-up," said Stewart Welch of the Welch Group.

In fact, investors are watching right now to see if the price of gold surpasses the record of $1,254 per ounce.

"But basically gold is a fear-based investment," said Welch. "So whenever things look very scary, investors naturally go to gold. That's just because over time, gold has been a store of value in a time of chaos."

Welch says several clients have been asking about gold as the U.S. endured the worst recession since World War II. However, he points out gold is not always a profitable way to go.

"If you'd put $10,000 in gold back in 1982, for the 20-year period ending in 2002, you'd still have $10,000," Welch said. "Yet inflation at just 3.2 percent would've eroded the value of that by about 50 percent."

Like Warren Buffett, Welch believes it's good to be "contrarian" and run away from what the crowd is doing in times like these.

He says the key is finding what will give you the best mix: profit in the long run and a feeling of safety now.

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