First of all, no one can ever predict with complete accuracy where markets are headed. If they could, there would be some extremely rich people in the world. Even investment gurus such as Warren Buffet have their occasional poor choice in investments. With that said, we can look at the future and see trends approaching. These trends are pointing to now being a good time purchase gold. Why is now a good time to purchase gold? Let’s look at a few reasons.
Gold performs well when the value of the dollar is low
When investors worry about the current and future value of their currency, they have historically turned toward gold to hedge their concerns. With the price of the dollar at a low against many world currencies you see investors in the United States turning to gold to help protect against further devaluation. Additionally, as the supply of dollars in circulation increases, investors who are fearful of inflation look toward gold to head off these fears.
Gold performs very well during periods of doubt in the economy
It doesn’t need to be mentioned too much that a lot of investors are skittish about the current economy. With talks of the “Great Recession” and a double-dip recession, investors are looking toward gold, which historically performs well during periods when people are in doubt about the direction the economy is headed. If the economy continues its slow recovery, more people will turn to gold as a “safe investment.”
Gold performs well when demand increases
This point, of course, is obvious, but it’s important to look at why demand might be increasing. Not only are more investors looking at gold for the previously mentioned reasons, but emerging nations are looking to buy more gold for their central banks. Out of the countries with the largest stockpiles of gold in the world, it was the Western European countries and the United States that had the largest portion of their foreign reserves in gold.
Emerging nations are now looking to close that gap. The Reserve Bank of India purchased $6.7billion worth of gold from the IMF, signaling a move toward adding more of the precious metal to their reserves. China has the sixth largest reserve of gold, but that accounts for only two percent of its total foreign reserves. If China decides to follow India’s lead, the demand for gold could skyrocket.
Although no one can say with complete certainty what the future holds for gold, signs are pointing toward a continued strong market for the precious metal. Contact the United States Gold Bureau today to speak with us about adding gold and other precious metals to your investment portfolio.