When Gold Is Mainstream Enough For eBay, It's Probably Time To Run
After a decade of soaring gold prices, eBay thinks now is a great time for the rest of America to jump into the market.
They've partnered with precious metals dealer APMEX to build an online gold emporium consumers can browse from home.
From a mega e-tailer's perspective, it makes sense. People are asking for something, so why not give them what they want?
"In today’s uncertain economy, people are looking to gold and silver as more reliable ways to invest, but some lack trust in those who sell gold and silver," the company says in a statement. "Many do not even know where to buy. The APMEX Bullion Center on eBay offers everyone a convenient way to buy gold and silver from a source they already know and trust, and people are taking notice."
From an investing standpoint, however, this kind of mainstream treatment should be a pretty big red flag.
"The allure of gold ... reminds me of market darlings of yesteryear," says certified financial planner Adam Bold. "Remember when everyone piled into dot-com stocks and drove them into bubble territory in the late 1990s? Most of those speculative Internet stocks crashed a few years later. Soon after that, people were jumping into real estate and home prices went through the roof. We all know how that turned out."
And while eBay markets its new store as a doorway into the "New American Gold Rush," a recent report shows that it might be a decade too late.
A commodity analyst at Goldman Sachs all but called the end of the bull market for gold in December, chocking up its soaring value to rising interest rates and a rocky economy that is now getting back on its feet.
"T he gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in US real rates on better US economic growth," the firms says. "Our expanded modeling suggests that the improving US growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013."
The bottom line: While gold can be a smart way for investors to diversify their assets, we'd be a little cautious before buying into a sales pitch that leads with the "New American Gold Rush."
We've been there, done that.
Here are a few slides from the presentation eBay used to make its case for its new gold emporium:
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