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What Do I Need to Know About Today’s Gold Market

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Gold

Gold has always been a good investment, especially in times of economic turmoil. At least that is what we have been told for a very long time. Is this still true in today’s economy? This article will help you to decide this for yourself.

You can look for gold in many different places in the world. You can read a good review about gold and where to buy it here: https://investingingold.com/onegold-review/ . You can also search the internet for more information and more reviews.

Buying gold is something that needs to be done with care and with the help of an expert. You want to make sure that you are getting the best value for your money and you want to make sure that you aren’t being scammed. If you know an expert or if you are willing to learn to be an expert yourself, you will be better off when buying.

Tips

Gold Does Not Pay Interest

Unlike other investments that you might have, this precious metal does not pay interest once you invest in it. It will just sit and hopefully increase in value, but it does not always do so. According to some experts, the price of this metal has remained stagnant since the early 2000s, and looks like it may continue to do so. You want an investment that will have dividends and interest, and gold is not that investment for you.

There Has Been No Inflation That is Relative To Previous Bouts Of Price Increases

Everyone says that gold is a hedge against inflation, and it probably was when we had outstanding inflation in the past. Inflation has not been as high in the world as when where it was in the seventies when it was in double digits in most places. Since the eighties, inflation has stayed in single digits and has not threatened to go as high as it was in the seventies. So buying gold as a hedge against inflation is not a great argument anymore.

The 1970’s Was a Unique Time In History

The biggest rate of inflation was in the seventies when we had a lot going on in America and in the world. In America, we had the Vietnam War, Watergate, and the gold standard ended. In the world, the Bretton Wood currency system came to an end. Inflation reached higher levels than at any other time in history: https://www.schwab.com/learn/story/is-1970s-style-inflation-coming-back#. There were issues with gas and oil because of worldwide crisis’s involving oil-producing nations. Because of all of this, gold prices ran up to new highs, levels not seen before or since. Precious metals prices may go back up to that level, but then again, they might not. It is just a matter of time that will tell.

Gold Was The Only Game In Town

Back in time, this precious metal was the only game in town when it came to hedges against inflation. That is no longer true today. Foreign currency is another hedge that we have today since the financial and currency markets have been liberalized. While precious metal trades are equal to about $800 million a day, foreign currency markets are trading about $4 trillion per day. You no longer need the most popular gold coins or bullion carried around in your secret suitcase, you just need US treasury bills, stocks, bonds, and notes.

Just Because You Know The Direction Of a Trend Does Not Make It An Investable Trend

There was a 35-year bear market from 1946-1981. This meant that there was a 35-year bull market in bond yields. If you chose not to invest in long-term bonds such as Treasury bonds or long-duration corporates, you did really well and received big-time yields. In the late 1970s, those bonds became certificates of confiscation, and they began doing even better.

In the early 1980s, it began to become tougher to do well on the markets because bond prices were moving down. It was very difficult to make money with bonds during this time.

Peak Demand For Oil Is Here

The price of gold is also tied to other commodities such as oil. When oil went from $2 a barrel to $34 dollars a barrel in the seventies, the price of precious metals followed right along with it. Since then, we have revolutionized the search for oil and have found more in our own countries through fracking and horizontal drilling, and other ways. The demand for oil is also going down due to the revolutionization of new cars that are electrically operated. There are some laws in our own country that say that by a certain year, all vehicles in some states must be electric. There are other, cleaner, ways to make electricity with wind and water power, among others. Because of this, the demand for oil is not where it used to be. And neither is the price of gold.

A Strengthening Dollar Will Be a Headwind for Gold

The issues of the 1970s help to make the sale of gold during that decade rise. The prices tended to rise right along with it. The dollar seems to move in cycles, and we are in a cycle right now where the dollar is doing well among other currencies. Because of this, the price of gold may fall in the near future to lows that had not been expected. This will make your gold investment not as good as you are expecting it to be.

Buy Gold Coins And Avoid Numismatics

The most popular gold coins, such as the American Gold Eagle, Canadian Maple Leaf, and the Chinese Panda, continue to grow in popularity. These are very collectible and worth the time and the money that you will invest in them – as long as you invest in them slowly. Do not try to invest in all of them at once, because you will not make any money. Invest slowly and make it last for a few years, and it will be a great investment for you. As long as the dollar continues on the trend that it is on now, you will do well.

What About Gold Stocks?

Gold stocks have always been riskier than tangible gold and remain so today. There are some gold stocks that have done well in the past, and continue to do well today. This is similar to other stocks that have done well throughout the years. Some stocks just do better than others. Some of the gold stocks that have done well recently are Newmont Mining, Agnico-Eagle Mines, Yamana Gold, Freeport-McMoRan Copper and Gold, and Goldcorp. This does not mean that they will always do well, that means they are currently stocks that you might want to look at.

Conclusion

Although gold has always been represented as the ultimate hedge against inflation, we are not having the same issues with inflation that we were having in the 70s and 80s. This means that we do not need that hedge as much as gold pushers are making us believe. Although gold prices remain fairly steady, they do not provide any dividends or interest when you invest in it like other commodities and stocks and bonds. Because of this, gold may not be the investment that you are looking for at the moment.

Gold is a fun investment to have, but it is not necessary for an economic catastrophe. Experts say that it will be difficult to trade gold in an economy where the dollar has collapsed because most people will go back to the barter system. People will want to barter more items that can be used for food, water, and shelter such as grains, wood, and water rights. They will want items that have a practical use and not want something to show off or decorate with. Precious metals will not have the same value as some people are led to believe in an economic crisis.