The Pros and Cons of Investing in Gold

Indeed, gold shouldn't be considered an investment at all, says Chris Hyzy, chief investment officer at U.S. Trust, the private wealth management arm of Bank of America in New York. Rather, the precious metal acts as a hedge, or a way to try to protect wealth against the risk of loss in such asset classes as real estate, equities and bonds, he says.

Traditionally, investing in gold has been used as a hedge against inflation. That thinking still holds, though worries over inflation might be better understood as a fear of the loss of purchasing power or that "the money we currently have today will decline in value," Hyzy says.

Frank Holmes, CEO and chief investment officer at U.S. Global Investors, a San Antonio-based investment fund, bases the case for investing in gold on the "fear trade" and "love trade."

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