With the world mired in geopolitical and economic uncertainty, investors' thoughts turn to gold, which may seem like a smarter investment than stocks.

And recent corporate scandals make gold that much more appealing. (After all, gold's CEO won't treat himself to lavish compensation while destroying gold's value.)

But inform yourself before you sell everything you own to buy a chunk of Fort Knox. All does not glitter in the world of gold.

Gold used to be the backbone of many national currencies, but for several decades now, that connection has been severed. The price of gold now reflects just supply and demand.

Gold doesn't have an impressive history as a great investment, either. From Jeremy Siegel's seminal book, Stocks For the Long Run, here's what a dollar invested in various things would have grown to, from 1802 to 2001 (Yes, just about 200 years!):

                 not adj. 
for inflation for infl. Stocks $8.8 million $599,605.00 Bonds 13,975.00 952.00 Bills 4,455.00 304.00 Gold 14.38 0.98

Over 200 years, through many wars and economic times even more troubling than those we face today, gold didn't prove to be a great long-term investment. In Fortune magazine, David Rynecki writes, "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 adds: "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."

So, how do you invest in gold in the first place? Well, here are several options, as described by David Kathman of Morningstar:

  • Gold stocks (often very volatile, combining the volatility of gold with the riskiness of a business)
  • Gold mutual funds (generally less volatile than stocks, but still rather volatile)
  • Gold accounts (purchased through bullion banks, usually with large minimum investments)
  • Chunks of gold (in coin or bar form, which have to be stored somewhere safe)
  • Gold certificates and pool accounts (available for those who wish to buy small amounts)

Kathman notes, "Returns aren't the point when you're investing in gold; diversification is... A small amount of gold alongside your stocks can be a stabilizer." He suggests considering these funds: American Century Global Gold(Nasdaq: BGEIX), Vanguard Precious Metals(Nasdaq: VGPMX) and Fidelity Select Gold(Nasdaq: FSAGX).

Learn more about investing in gold from the (somewhat biased) World Gold Council and from this vintage Fool article. Or drop by our Mining and Metals discussion board.