The Last Time Gold Was This High...

It was January 1980. I was 12 years old, and about to be bar-mitzvah'd (the coming-of-age ceremony in the Jewish tradition). My stepfather convinced me to put all of the money I'd received in gifts into Krugerrands, the South African 1 oz. gold coins. I vividly recall him saying "Gold's a great investment. It's got nowhere to go but up." So I put $2,000 into the beautiful coins, which got me about 2.5 ounces. By the time I needed to spend the money, to pay for my tuition at UCLA, gold was down to about $300/oz. My $2,000 had become $750.

I was young, but this was my first, and most impactful lesson about how asset classes go in and out of favor. It taught me to always spread the risk around to many different categories of assets. And above all, to avoid thinking the recent past will repeat itself, whether positive or negative. Remember this as you consider bailing out of your 401k or other investments which have just lost most of their value.