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Is Gold a Falling Knife?

By Doug Ehrman - Apr 18, 2013 at 10:59AM

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The recent plunge in gold should give you pause before investing.

Due to gold's recent plunge marking its largest percentage drop since 1980, the explosive volume in the SPDR Gold Trust (GLD 0.05%), and many swirling global macroeconomic factors, the precious yellow metal has spooked investors. The decline has not been limited to the commodity, as miners like Goldcorp (GG), Barrick Gold (GOLD -0.14%), and Newmont Mining (NEM 0.00%) are experiencing precipitous declines as well. Adding to the concern is the fact that investors have been unable to pinpoint the precise cause of the collapse.

GLD Chart

GLD data by YCharts

In the below video, Fool.com contributor Doug Ehrman discusses whether gold has become too risky to touch under current circumstances and what the prospects for the future of the commodity look like. Gold has classically been considered a safe-haven investment, making its spiking risk a unique market dynamic worth understanding.

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Stocks Mentioned

Goldcorp Inc. Stock Quote
Goldcorp Inc.
GG
SPDR Gold Trust Stock Quote
SPDR Gold Trust
GLD
$172.85 (0.05%) $0.09
Barrick Gold Corporation Stock Quote
Barrick Gold Corporation
GOLD
$20.60 (-0.14%) $0.03
Newmont Mining Corporation Stock Quote
Newmont Mining Corporation
NEM
$68.71 (0.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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