The truth is that gold and other precious metals are very volatile and past performance is not a good indicator of future performance. If the sales pitches also include a. If the sales pitches also include a lot of pessimistic or high-pressure sales tactics, they could be setting you up for fraud. Gold is considered a safe investment.
It is supposed to act as a safety net when markets are in decline, since the price of gold does not usually move with market prices. For this reason, it can also be considered a risky investment, since history has shown that the price of gold does not always rise, especially when the markets are rising. Investors often turn to gold when there is fear in the market and they expect stock prices to fall. Investing in gold is generally considered to be a hedge against inflation, since gold retains its value while the purchasing power of fiat currencies erodes.
However, it becomes less attractive when interest rates rise, as investors don't receive interest or dividend payments for holding gold. Gold is often thought of as a counterinvestment in stocks. In other words, the price of gold rises when stock prices fall. There are times when both gold and stocks have fallen in value simultaneously and when both have risen at the same time.
Whether gold is an appropriate investment for your portfolio at this time will depend on your personal circumstances and risk tolerance. And, although gold is traditionally considered to be a safe asset, it can be very volatile and lower in price. When times get tough, which is usually the best time to own gold, there is usually a correspondingly high demand for cash. Commodity analysts are cautious about the prospects for the gold market in the current interest rate environment and see the possibility of a further fall.
Some people believe that silver is usually a better investment than gold, and they expect that its lower price will give them a better return if the markets ever change for the better. Investing in gold is beneficial for many reasons, especially when the economy is uneven and the economic forecast is unknown. While stocks and bonds can cause declines in value because of that instability, gold often thrives because of it. Gold has served as a long-term store of value for thousands of years and has often been used as a form of payment.
While other precious metals are also used as portfolio hedges, the gold market has the advantage of high liquidity. Gold is not an infallible investment, as is the case with stocks and bonds, its price fluctuates depending on a multitude of factors in the global economy. But that doesn't mean that gold or silver or other metals are “safe places” to store your wealth. In times of uncertainty, people turn to gold with the false assumption that it will be a safe investment.
If you think you could benefit from buying gold in an inflationary market, talk to a professional now to get started.