We have honestly never been too enamored with gold as an investment, particularly when one looks at it's historical volatility. Timimg is everything in the gold market. However, "how you buy it" certainly changes the dynamics and risk profile. For the most part you can either buy the bullion, buy "processed" gold such as gold coins or jewelry, or buy a gold stock or mutual fund. The first two options are our least favorite unless you believe the world is ending and people will no longer accept your currency. Although that is a possibility, we would suggest it is a low probability and guns would likely make a better investment then than gold.
Our main problem with bullion or coins is that the only way you make money is if the metal goes up in value. There is no income and in fact you may incur costs with holding it such as the expense of a safety deposit box. In the case of coins or jewelry you also pay a premium for the "processing" which means it has to rise some just to break even.
However, gold stocks or mutual funds actually represent infinite life businesses with other opportunities to make money without just relying on the spot metal going up in price. You may earn a dividend and if management is adept at hedging their risks you may still have stock appreciation even if the metal price itself stays flat or drops. Also, management always has the ability to find other markets for the product or even to diversify into other metals reducing their exposure to just gold. Finally, stocks and funds are easy to sell but actually selling bullion or processed gold is much more difficult and usually has higher expenses associated with selling.
So, again, should you buy, sell, or hold? We're not going to make the specific market call for you, but most financial planners say a portion of one's assets should be invested in "hard assets" like metals or timber as they often move opposite the stock market and historically have provided a good inflation hedge. When markets are high, sometimes a good strategy is to dollar cost average in, buying small amounts periodically at varying prices. That way you never pay the most or least but have an average price that is competitive as long as the general trend is up. Again, we believe there is a higher probability that the general trend up is more likely to incur owning the actual business as opposed to just the metal itself. Let us know what you decide.:)