Investors Be Warned: Gold Bubble Could Burst

Michelle Singletary, in her Washington Post/Bloomberg column, warns that the popping sound is the price of gold bursting.

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The price of gold surged to new highs in August. (Getty)

Michelle Singletary writes in her Washington Post/Bloomberg column that Murphy's Law may soon hit the gold market, quoting experts who say it has reached the level of a speculative bubble. 

Oh, gold prices may go up again, but investment advisers and regulators are warning investors to be careful about putting too much of their money in gold.

As the stock market has vaulted up and down day after day, investors have fled to gold. But have all these investors chasing what they think is a secure investment created a bubble?

You bet your glittery gold bullion, says Wells Fargo Private Bank, which manages money for wealthy clients.

"We believe that we have reached the point where we can confidently state that interest in gold investing has reached the level of a speculative bubble," the bank's investment team wrote in a market update issued Aug. 15. "Prudent investors should be very wary of having substantial investment exposure to this precious metal in their portfolios."

Quickly and with very little warning, the bottom can drop out on gold prices, the report said. During a six-month period in 2008, gold lost more than 30 percent of its value. In the 1980s, in just over two years, the price plummeted about 65 percent. 

Read Michelle Singletary's entire blog entry at the Washington Post/Bloomberg.

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