Should You Invest: Is It a Good Time to Buy Gold?

Is Gold a Fix for Uncertain Times?

Throughout history, gold and other precious metals have maintained their status as fixtures in the ever-evolving global financial markets. Investors often turn to gold because of its historical role as a hedge against economic and geopolitical uncertainty. Unlike some other asset classes, gold serves as a store of value, retaining its value and purchasing power regardless of macro trends or currency devaluation.

Should You Invest in Gold?

As a safe-haven asset, people have turned to gold investments time and time again when they’re worried about the economy. This article delves into the many factors that influence the precious metal’s price, how it’s used to diversify portfolios and whether now is an opportune time to allocate resources to gold.

When to Invest in Gold

If you’re thinking about adding gold to your investments, there is no shortage of ways to gain exposure. Whether that means investing in the precious metal by buying gold bars and coins, opening a gold IRA, or owning a gold-mining company’s stocks or gold exchange-traded funds (ETFs), you should contemplate the following criteria before making an investment decision.

During Times of Higher Inflation

Gold is a popular investment when inflation is high. That’s because the precious metal is seen as a relatively price-stable, safe-haven asset when the cost of consumer goods and services rise, and purchasing power subsequently falls.

During Times of Economic Uncertainty or Geopolitical Unrest

Geopolitical unrest can have a positive effect on the price of gold. As global tensions increase, so too can precious metal prices. Investors can turn to gold as a safe-haven asset in order to protect their wealth.

When You Want to Diversify Your Portfolio

Gold, like other precious metals and commodities in general, also serves as a great way to diversify your investment portfolio. However, unlike other precious metals and commodities, gold can be thought of as money, literally.

Storage and Insurance Costs

The costs associated with storing and insuring gold can be a detriment to overall potential gains. Since precious metals held in self-directed gold IRAs must, by law, be held at IRS-approved depository facilities, you’ll incur fees charged by the custodian to oversee the storage and insurance of your gold.

Price Volatility

The gold market is typically seen as being more stable compared to other markets. Illustrating this, since the 1930s, the U.S. dollar has lost 99% of its purchasing power relative to gold.

Gold Price FAQs

Beyond supply and demand, which can be impacted by fluctuations in the amount of gold produced and its industrial applications, numerous other factors contribute to the price of gold. The value of the U.S. dollar, bull and bear markets, inflation, interest rates and geopolitical unrest can all impact the gold market.

Should You Invest in Gold this Year?

Whether or not you invest in gold comes down to your personal preferences. If you want to hedge against inflation, diversify your portfolio with a safe-haven asset and provide yourself with downside protection for your other holdings, gold could be a good fit. However, if you’re interested in income-producing assets, don’t want to pay recurring annual fees in an IRA and prefer higher-risk assets, perhaps gold isn’t right for you.

Summary of Money’s Is It a Good Time to Buy Gold?

Gold is historically a safe and stable investment that can protect you in times of economic and geopolitical uncertainty. Its price holds up well during times of high inflation and high interest rates, and sees increased demand and price appreciation during traditional equity bear markets rather than bull markets. Like all assets, the price of the precious metal and its demand ebb and flow depending on numerous circumstances.

More from Money:

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Beginner’s Guide to Investing in Precious Metals

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