The price of gold recently hit a 16-year high as the precious metal draws more and more interest from investors spooked by stocks and geopolitical uncertainty. With it priced near $420 per ounce, should you jump in and snap some bullion? Well, maybe, but maybe not.

Gold can be quite volatile, and in the long run, it often doesn't prove to be a great investment. In his seminal book, Stocks for the Long Run, University of Pennsylvania finance professor Jeremy Siegel revealed what a dollar invested in various things would have grown to, from 1802 to 2001 (yes, just about 200 years!): stocks, $599,605; bonds, $952; bills, $304; and gold, $0.98. (Amounts have been adjusted for inflation.)

In Fortune magazine, David Rynecki wrote, "Gold investors are notoriously bad forecasters. From 1985 to 1987, for example, a collapse in the dollar boosted gold 76% and had many metalheads predicting an extended rally. Instead the price fell 15% the very next year." He added: "Even bullish gold pros caution the average investor to put no more than 5% of a total portfolio into gold-related holdings and say it's safest to invest through funds."

Those are some good points: Don't put too much into gold, if you invest anything in it. And think about how you invest in it, since you have several options. Here are some (of many) ways you can invest in gold:

  • Gold stocks. These can be especially volatile because you're betting not only on the movement of gold prices but also on the performance of the companies.

  • Gold mutual funds. These can be somewhat more stable, but still volatile. Some examples are American Century Global Gold (FUND:BGEIX), Vanguard Precious Metals (FUND:VGPMX), and Fidelity Select Gold (FUND:FSAGX).

  • Chunks of gold. These might be in coin or bar form, and you'll have to store them somewhere safe.

  • Gold certificates. With gold certificates, you're buying not gold, but a promise to be paid gold at some time in the future.

Kiplinger's magazine recently recommended another option -- StreetTracksGold Trust (NYSE:GLD), which is an exchange-traded fund (ETF) that tracks the price of gold.

Still, be careful if you invest in gold. Financial planner Nancy Swain has reminded investors, "It's a commodity.... When you get into precious metals you really get into speculation." Rochester Democrat and Chronicle writer Frank Bilovsky noted, "Going back to the early 1980s, gold peaked at more than $800 an ounce and silver, buoyed by Nelson and Bunker Hunt's attempt to corner the market, touched $50 an ounce. Purchases at those prices would have left someone well in the hole after more than 20 years."

Lead more about gold in these articles:

And learn more about investing in gold from the (somewhat biased) World Gold Council and on our Mining and Metals discussion board. If you're looking for promising mutual funds that invest in gold and/or stocks, grab a free sample of our Champion Funds newsletter. And for promising stocks that probably have little to do with gold but are highly favored by our analysts, take advantage of free samples of our other newsletters.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.