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Apr 1 2008 2:42PM EDT

Gold: Too Volatile to be a Safe Investment

Eddy Elfenbein notes today that gold has dropped below $900 an ounce. Gold funds in general are suffering, with the biggest of them all, the $8.2 billion Merrill Lynch World Gold, down 10% in March. But they're still bullish:

The Midas Fund, managed by Thomas Winmill in New York, fell more than 11 percent last month, leaving it 4.1 percent down this year.
``As the gold price recovers and exceeds recent highs, we expect Midas Fund to outperform,'' Winmill said in an e-mailed message yesterday.

When gold exhibits this kind of volatility, it's not for risk-averse investors, no matter how much the goldbugs say that it's a safe haven. Given how risk averse the IMF is, I think that selling the Fund's gold reserves is still a pretty good idea.

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