In the last few weeks gold prices have made a jump to levels never seen before. Today gold prices topped $1,245 an ounce as fears about the Greek debt problem and the subsequent bailout program from the European Union.  If you have followed gold very closely at all you know that gold is the ultimate safe haven play when other assets and currencies are under pressure. The current flight to safety is one that many had predicted for quite some time. Obviously, those who own gold right now are happy. The bigger question is, over the long run, should you own gold in your investment portfolio?

There is no doubt that gold is a safe investment that will help you sleep better at night. It is the kind of asset that always perks up nicely when all of the others are in deep trouble. The fact that it is safe does not mean it always moves higher though, which many investors can sometimes misunderstand. If you take a close look at a historical gold chart showing prices between 1980 and 2000, you’ll see exactly what I am speaking about. In 1980 gold traded most of the year between 650 and 700. In the year 2000, gold prices sat at about 275-300. A 20 year long investment in gold would have hurt the investment portfolio in a big way. At the same time, if you had invested around 300 about ten years ago, the current levels above 1,200 have allowed you to quadruple your money. The point here is that despite the safety of gold, it undergoes huge price swings.

Since gold is currently trading at a historical high, it is hard to recommend putting money into the precious metal at this point. History tells us that the price of gold will go through cycles, which means you are in quite a bit of danger if you invest at a historical high. Should you own gold inside your portfolio of investments? The answer is likely yes, but a wise investor will pick their spots and keep it as a small percentage of their portfolio, primarily for diversification and safety during troubled times.