While gold prices may temporarily be stagnant or down, all the long-term gold market trends point to increased growth in the value of gold.
Gold has tripled in value since 2006 and has recently slowed its upward rise, hovering around $1,200. Investors shouldn’t view this as the beginning of a decline in gold’s value, as all the fundamentals that led to a spike in gold prices are still in play.
Gold typically rises in value during times of economic hardship and uncertainty. The last two years, if anything, have been difficult and uncertain with meltdowns in the financial and housing markets. Once safe financial investments have become dodgy at best, leaving investors looking for a safe harbor.
Historically, gold has been the investment that people turn to in economic recessions, monetary crises and geopolitical upheaval to guard their wealth. During the Great Depression, gold’s value increased more than tenfold. In our current economic crisis, the value of gold has tripled between 2006 and now.
Recently the gold market has cooled as some indicators have shown that the economy is pulling out of recession. However, this may be short-lived as new signs are coming in that the massive debt spending by the government to stimulate the economy isn’t working. Consumer confidence is lagging again an unemployment remains high. Neither political party in the U.S. seems to have substantial answers to the serious and long-term problems posed by a high debt burden and massive entitlement program obligations.
Throughout the world, investors and nations are turning to gold as a bulwark of stability. Shockingly, there has been talk among many nations of abandoning dollars as a reserve currency. It is highly likely that an increasing number of countries will want to add gold to their reserves to back their own currency, thus increasing the value of this commodity.
All things considered, the time appears to be ripe for gold to spike again.
Investors seeking to get into the gold market need to do their homework before wading into the mix. Research how gold is valued, how prices are set and the benefits and drawbacks of investment vehicles such as bars, bullion, coins, EFTs, futures, etc.
Gold can be a great investment if the investor is sufficiently knowledgeable and doesn’t engage in emotional investing. Investors in the gold market should be sure to learn about the premiums involved with buying physical gold assets. Investors in more complicated gold assets should learn the ins and outs of trading these complex instruments.
Now is an opportune time to get into the gold market, as the temporary lull in gold’s upward price trend gives investors a window of opportunity to get into gold at a competitive price. With the right knowledge and a good sense of timing, canny investors can profit from the current economic turmoil to secure their assets and grow them.
