August 2, 2018
News that gold prices have dropped by almost 11 percent since its 2018 high in January sounds like bad news for the gold market.
The surprising thing is that gold sales do drop when prices slump. Which is madness when you think about about it!
Why would you want to buy gold when the prices are high? The best time to buy gold is when the prices are low.
But this is exactly what happens. Investors follow trends and invest in stocks that are moving in an upwards trajectory.
That’s a wrong move. Especially for commodities like gold.
In the current economic climate, gold – dollar for dollar – is at an all-time low.
Yes, you did hear that right.
Even though gold bullion is $1250 per ounce, the yellow metal has never been valued at such a low price.
As an economist, it seems quite remarkable. As you know, gold prices go up in times of economic uncertainty and down when the economy is doing well.
Yet despite all the financial signals, – US and China trade war causing inflation, Iran sanctions rising oil prices and unrest in Middle-east – investors are not falling for the mind games played in the financial markets.
On the other hand, we know in our heart of hearts that the economy will not continue to flourish for much longer. We only have to look at the historical charts to see the warning signs staring us in the face.
As a matter of fact, analysts at Morgan Stanley have already issued a warning that the stock market is showing signs of strain.
Gold is a long-term investment and has the potential to add at least $1000 to your pension fund. Of course, if you buy precious metals early in your savings career, you will probably benefit from a higher profit margin.
However, if you wait for the economy to crash and gold to rally, you will miss out on significant profits.
For example, in 2015, gold started the year at $1183.30 an ounce and was up to $1283.15 by the end of the month. The Charlie Hebdo terror attacks in Paris spooked the market.
Before the 2008 banking collapse gold was around $850. Over the next three years when the economy was in the doldrums, gold prices went as high as $1823.
If you wait to buy gold when the prices are on the rise, you narrow your profit margins.
Optimists will tell you to wait for gold prices to fall even further before buying gold. This could be sound advice, but optimists are not fortune tellers. Gold prices could surge at any moment.
Geopolitical unrest and terrorism are triggers for a rise in gold prices. The fragility of world politics at the moment is at breaking point.
Whilst President Trump has helped to strengthen the American economy, his wanton diplomacy is falling short across international borders.
America has to be very careful how they cultivate relationships with Russia, Iran and China at the moment. Any of the international behemoths could pull the rug from under the greenback and bring the deck of dollars crashing down.
The US economy may look strong on paper, but paper money is precariously weak.
Smart investors know the only way to protect your financial future is to invest in gold. And with prices at $1250, there has never been a better time to buy gold.