Gold investors be wary – this bull run doesn’t mean you should chase momentum | Personal Finance | Finance

Gold always glitters when fear takes hold, and right now there is a lot of fear among investors globally. The price of the yellow metal is soaring as a result of a slowing global economy, inflation anxiety, strong central bank demand and ongoing geopolitical tensions. The US government shutdown is another contributor to the current gold bull run.

But would-be investors in gold need to tread carefully and not fall foul of FOMO. The fear of missing out can see people do irrational things and invest a lot of money in what seems like a sure thing – right at the top of the market. Even those who already have exposure to gold need to be wary of increasing their exposure given that they are buying it at record highs. In short, the point at which everyone is talking about gold is often a signal to pause and take stock rather than pile in.

Yes, gold will often be part of a diversified investment portfolio, but it should not be the headline act.

Ultimately, gold is an insurance asset, not a guaranteed growth engine. Unlike shares, it doesn’t pay income, so your return depends entirely on timing and price movement.

Those who bought early have done well and may consider taking profits or trimming exposure.

But new investors chasing momentum risk buying in at the top. And while some are predicting gold could hit $5,000 soon enough, they are predictions and nothing else.

As to how you should buy gold, for UK investors exposure via exchange-traded funds (ETFs) in an ISA or pension is usually more tax-efficient than holding physical bullion.

But for those who prefer coins, Sovereigns and Britannias remain Capital Gains Tax-free, but not all coins are equal, and buyers need to know which carry greater value.

Ultimately, gold’s long-term value lies in diversification and discipline and not in hype or herd mentality buying.

The yellow metal has its place, absolutely, but it is not a substitute for a balanced investment plan.

To anyone considering buying gold right now or adding to their portfolios, my message is simple: buyer beware. Seek professional advice before you pile in.

Eamonn Prendergast is a chartered financial Adviser at Palantir Financial Planning