Investors seek safe haven in gold

Investors scared away by shaky equity markets have been mining the gold market, but financial advisers are mixed as to whether the investments in the precious metal are a long-term play. Since the financial markets began their descent Sept. 12, the price of an ounce of gold has increased $136.16, or 18.2%, to $882.63 at the close of trading yesterday. Gold prices had risen 5.9% year-to-date. Meanwhile, the value of the dollar declined 4.5% on the euro to $1.46 at the close of trading yesterday. “I think the price increase in gold is a panic move,” said Roman Franklin, an adviser at Franklin Financial Planning Inc., a four-year-old firm in DeLand, Fla., which manages $9 million in assets. “Gold made this climb recently as part of the fallout that has resulted from investor perception of an economic crisis.” But Steven W. Medland, a partner and principal at TABR Capital Management LLC in Orange, Calif., which manages $150 million in assets, feels that a government bailout package will make gold investing a safe bet. “I think that a bailout package will eventually cause significant inflation in the economy and it may take a long time to work its way through the system,” he said, noting that he suggests that clients have a 5% exposure to gold in their portfolios. “People are right to buy gold at these levels to hedge that risk,” Mr. Medland said. For the full report, see the upcoming Sept. 29 issue of InvestmentNews.