To say that there’s a great deal of unease going on in markets today is a bit of an understatement. Fears of renewed lockdowns are causing markets to yo-yo. Rising inflation is harming consumers and leading to fears of an economic slowdown. Businesses are facing labor shortages and supply chain issues. Our entire sense of normal has been upended for over a year, and no one knows when normal will return, if ever.
During times of uncertainty like these, many people cling to what they know and trust. For investors, that means falling back to assets in which they feel safe investing. And for many investors, that means buying precious metals like gold and silver.
Some people think they may have missed the boat, that gold and silver are now too expensive and that they’ll never be able to get the chance to invest in precious metals again. But that’s not true. Here are four reasons now is a good time to buy gold and silver.
1. Buy the Dip
If you’ve watched gold and silver prices over the past few years, you may remember that it wasn’t too long ago that gold was trading at around $1,200 per ounce, and silver was at $14 per ounce. My how times have changed.
That was only three years ago, and now gold is over $1,800 per ounce while silver is at around $25 per ounce. And those prices aren’t even as high as gold and silver reached last year, nor are they as high as gold and silver could go in the future.
Right now, we’re in a bit of a holding period, one in which no one knows which way markets are going to go and when. Everyone has a general unease about the future, which is causing stock markets to plateau. But while stock markets have risen this year while precious metals plateaued, gold and silver prices haven’t dropped back to where they were even at the beginning of last year.
If you think gold and silver prices are going to drop, and you want to wait until gold is back down to $1,250 and silver is back down to $15, you may be out of luck. There’s probably not a person on the planet who believes gold and silver will drop to those levels anytime soon, if at all.
If you think $1,500 gold and $20 silver are good strike points, you may still be out of luck. No matter how topsy-turvy markets may get, it looks like $22 for silver and $1,700 for gold are the real floors. And gold and silver may not even drop to those prices again for a while.
Many people expect the economy to enter a downturn in the near future, which means that gold and silver prices should continue rising. This could be the last chance you have to buy gold and silver relatively cheaply. With many analysts expecting gold to hit $2,000 by the end of the year, and silver $30, any continuing weakness in the economy could send the prices of gold and silver soaring.
2. Rising Inflation
Inflation is rising significantly, with year-on-year inflation over 5%, and month-on-month inflation rising at an 11% annualized rate. Economist John Williams at Shadowstats, who uses the original CPI calculations, estimates the actual inflation rate at 13%.
Regardless of what the number is, the fact is that inflation is taking a bite out of many investors’ portfolios. That’s especially true for investors nearing or in retirement, whose portfolios may be fairly conservative and low yielding. The higher inflation rises, the more difficult it becomes for retirees to maintain their standard of living, and the more of their retirement savings they will have to liquidate each year.
Gold and silver’s performance during times of high inflation has made them very popular assets for investors looking to protect their assets. During the stagflation of the 1970s, for instance, gold and silver averaged annualized returns of more than 30% for the decade, well above inflation and well above stock markets.
During the aftermath of the 2008 financial crisis gold nearly tripled while silver more than quintupled. And with higher inflation looking likely to possibly persist for the next several years, gold and silver could end up making great gains in the years to come.
3. Economic Uncertainty
No one likes to lose money, although that’s one of the risks you take when investing. Minimizing your losses can be an important part of your investment strategy, in keeping with Warren Buffet’s number one investing maxim: never lose money. There will certainly be times when your portfolio loses value, no matter what you’ve invested in, but there are ways that you can help protect yourself.
Traditionally, precious metals like gold and silver have been some of the most trusted assets during periods of economic uncertainty. When markets start to slide and investors fear that they’re going to lose money, many flocks to gold and silver as sources of stability. Those who made the decision to invest in gold and silver before that panic end up benefiting from the resulting rise in price.
4. Portfolio Diversification
While stock market indexes may have seen great growth over the past several years, much of that growth is concentrated in a small handful of stocks. Take those stocks away and index performance hasn’t been that great. That means that on the downside, indexes could decrease significantly when that small handful of stocks starts losing value in a stock market correction.
That’s one reason you’ll hear so many people talking about diversification. Portfolio diversification is nothing more than not keeping all your eggs in one basket. You don’t want to remain invested in a single stock, a single index, or even a single class of assets.
Many investors think that a mix of stocks and bonds is sufficient diversification. But what happens during a systemic crisis like 2008, when both stocks and bonds cratered? Gold and silver both performed remarkably at that time, providing much needed protection against loss and providing much-needed gains after the recession was over. With the US economy looking set for a correction in the future, gold and silver could play a similarly protective role very soon.
Buying Gold and Silver is Easier Than Ever
For those who may not have experience purchasing precious metals, the thought of buying gold and silver may be daunting. There are so many products out there, and so many places to buy gold and silver, that narrowing down your choices may seem impossible. But that’s where the precious metals experts at Goldco can help.
As a full services precious metals firm, Goldco offers investors the ability to purchase gold, silver, platinum, and palladium coins and bullion. If you have existing retirement savings in a 401(k), IRA, TSP, or similar tax-advantaged retirement account, you can roll over or transfer those assets into a precious metals IRA tax-free. That allows you to invest in physical gold or silver coins or bars while maintaining the same tax benefits as your current retirement accounts.
Or if you would prefer to leave your retirement accounts alone and move your cash holdings into gold or silver instead, you can do that too. Goldco offers an impressive selection of gold and silver coins and bullion. And our relationship with mints worldwide ensures that the gold and silver you buy is guaranteed to be authentic.
Protecting your savings means working with a trusted partner. Goldco’s many years of experience helping tens of thousands of customers benefit from gold and silver has made us one of the most trusted and reputable precious metals firms in the industry. Talk to our precious metals experts today and let us help you safeguard your financial future with gold and silver.
is America's Gold IRA Expert, CEO of Goldco Precious Metals, and holds a position on the Los Angeles board of the Better Business Bureau.
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