When is the Right Time to Buy Gold?

Is now the right time to buy?” With gold, the answer is always the same: Yes. Gold is an investment for the long run.

Gold can benefit you as an investor in a number of ways. Gold has lasting value, can be bought and sold quickly and easily, and is a recognized asset of last resort.

Perhaps gold's most enduring benefit is its ability to diversify and stabilize a portfolio and protect it against stock market fluctuations. Most importantly, when you buy the right gold, it's completely private and non-reportable.

“Is now the right time to buy?” With gold, the answer is always the same: Yes. Gold is an investment for the long run. The right time to buy gold is when you understand what it is and what it can do for your portfolio.

This following report details why you need gold and what gold can do for your portfolio.

  • Gold – A Long Term Storehouse of Value. Historically, gold acts as a reliable “store of value” because gold fulfills all the functions of money.
  • Gold is portable and divisible, easy to store in an emergency and far more reliable than paper money in a crisis.
  • Gold is indestructible, relatively scarce, and cannot be “manufactured.” It's value cannot be inflated away like paper currency.
  • Gold is recognizable and acceptable as a form of payment making it easy to buy, sell or trade worldwide.

Gold is Once Again in Favor
In the 1990's, gold prices traded down while stock prices were high and inflation was low. Historically, gold's best friend has been inflation. Energy shock and oil shortages can create both temporary and permanent economic inflation. Most recently, the combination of extremely low interest rates, the Federal Reserve flooding the market with paper money after 9/11, and energy prices now double or triple what they were two years ago has brought inflation back into the U.S. economy.

Economic cycles are permanent facts of life and one of the best reasons to acquire gold. Even though gold prices fluctuate, over the long term, gold has maintained its long-term value. In contrast, most currencies (including the U.S. dollar) and industrial commodities have generally declined in value due to inflation. Even as little as 3% inflation a year will destroy half of the buying power of your savings in less than 17 years.

In years when energy shock dominated the U.S. economy, the Federal Reserve was not able to stop the inflationary spiral regardless of how high they took interest rates. Is history about to repeat itself? Could we be seeing just a glimpse of the destruction inflation can create.

1979 Was An Historic Year for Gold
To put inflation into perspective, let's look at how inflation hit the average American household in 1979. Rising prices hit commodities, the gas pump, and moved across the economy like wildfire.

  • First, sugar went from 19 cents a pound to well over $1.00.
  • Coffee tripled in price.
  • Gasoline prices soared as it became hard to get; long lines become common.
  • Middle East tensions exploded when Iran seized the American Embassy.
  • Interest rates rose quickly and the prime interest rate reached an historic 21%.
  • In three months time, gold prices went to $850/ounce. Silver traded over $50 an ounce.

Gold Rose from $35 to $850, a 2,400% Increase

Hard to imagine now, but it happened– driven in no small part by a lack of confidence in U.S. leaders and energy shock. Over five years, gold had made a long, hard climb from $35 per ounce to trade between at an amazing level of $100 to $200 by early 1979. As investors worldwide panicked out of the weak U.S. Dollar, gold prices topped $850 an ounce.
That’s an 8-fold increase in the price of gold in a year!

Will such an event occur again? We just don't know for sure. But, we are worried, very worried about exactly the same kind of events that we see in place today. Led by a weak President and a new Federal Reserve Chief, the market might panic again.

Exactly the right events were in place in the 1970's– a combination or rapidly rising energy prices creating energy shock, inflation in commodities, a serious Middle East crisis, and the Federal Reserve's constant raising of interest rates.

Some of us are saying– "Oh no, here we go again!" In many ways, we could be just at the beginning of another critical inflationary cycle in U.S. For those who feel that history is about to repeat itself, gold can help. Gold provides a way to offset the losses of other investments during periods of high inflation and economic crisis.

Gold is a Hedge Against Inflation
As a result of the events we've seen since 2002, gold prices are already up 71% based on a growing investor demand. People are and should buy gold as a hedge against inflation and currency fluctuations in uncertain times. It's why so many investors around the world see gold as the “ultimate asset”– an important and secure part of their portfolio.

In the past, gold has had an impressive track record of providing financial stability against inflation. Gold has kept up with inflation during the past 200 years as reported by the World Gold Council. In other words, the value of gold – what it can buy in real goods and services – has remained remarkably stable over time.

For example, a man’s suit in sixteenth century England at the time of King Henry VIII cost the equivalent of one ounce of gold, roughly the same as a suit would cost today.

Pie Chart

Gold, The Portfolio Diversifier

Whether your investment approach is conservative or aggressive, gold can play a vital role in diversifying your portfolio. Many experts urge investors to keep a portion of their total assets in gold at all times.

"Gold’s low-to-negative correlation with stocks and bonds makes it an excellent portfolio diversifier."

The purpose of diversification into gold is to protect the total portfolio against fluctuations in the value of any one asset or type of asset. Gold does exactly that. The reason is basic: The economic forces that determine the price of gold are different from, and in many cases opposed to, the forces that determine the prices of financial assets.

As a result, gold prices move up independently of stocks and bonds– gold often rises in value when stock prices fall, and vice versa. Simply put, gold can be viewed as portfolio insurance to guard against unforeseen stock market gyrations or a major stock market crash.

It's Easy to Buy, Sell, and Trade Gold
People hold gold for safety, security, and privacy. When you buy the right gold, it's easy to buy, sell, store and transport your gold in a crisis. Gold can be purchased in many forms including modern Gold bullion coins, Gold bars and wafers. You can make purchases in virtually any amount, ranging from a fraction of an ounce and upward.

Many people chose to acquire gold bullion coins that are manufactured by a major gold producing nation like the United States, Canada, or Australia. The weight and purity of gold coins are precisely controlled and standardized by internationally-recognized refiners and official government mints, allowing you to buy with confidence and sell with ease.

In addition to the popular one-ounce size, bullion coins are available from 1/10 of an ounce to 1 kilogram. Popular types of gold that are traded in today's market include American Eagles and Canadian Maple Leafs, which can be purchased directly from Austin Rare Coins and Bullion.

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