Is Now a Good Time to Buy Gold?

Best Time to Buy Gold

Best Time to Buy Gold in 2018

While stories about Bitcoin and crypto currencies dominate the financial news headlines, many investors have followed suit, employing crypto currencies as part of their investment portfolio.

But the decision to buy gold and other precious metals could be an intriguing prospect, reducing risk in portfolios and delivering significant returns.

Why Gold?

Gold in all its forms can serve to weather all seasons of market uncertainty, inflation, deflation, and potential currency problems.

In comparison to many assets such as stocks or real estate investments, there are different notable uses of gold. It is a commodity that is, first and foremost, wealth insurance. It often acts as a portfolio hedge, serving as a strategic asset during market downturns and market corrections.

Indeed, gold has historically proven itself as a secure refuge during market turbulence, like that experienced in 2008, 2011 and 2015.

Advantages of Gold

While gold peaked at its record high in 2011, at just over USD $2,000 per ounce, many experts and financial analysts predict that a big gold correction is coming. The weakened U.S. dollar and current financial and geopolitical uncertainty have also provided support in gold instruments increase their value.

During times known as “crisis commodity,” gold has historically been shown to outperform other instruments. In 2017, gold prices rose by 12.5%. And with Jerome Powell tapped as the new Federal Reserve Governor by President Donald Trump, banks expect to see interest rates hike, increasing gold prices.

Even with Bitcoin and other crypto currencies’ market values on the rise, these digital currencies aren’t tangible in the same way that gold or other precious metals are, making it harder for investors to recover or insure their investments. Plus, as a decentralized asset, there is no guarantee that crypto currencies will remain positively bullish.

As a completely digital asset, in the event of a global digital crash, any investments made in Bitcoin or other crypto currencies will become essentially worthless.

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A Key Part of  Larger Portfolio

As part of a diversified investment portfolio, when gold is maintained or sustained over the long term, gold instruments (such as gold equity funds, sovereign gold bonds, gold exchange-traded funds, etc.) can enhance portfolio performance, especially in downturns.

Year-to-date, gold has shown itself as one of the best-performing assets any investor could have in their portfolio.

With the world continuing to experience geopolitical fallout, and given the macroeconomic picture, gold is a useful investment tool to preserve wealth and deliver positive long-term returns during adverse times.

To support your investment portfolio during turbulent times, your gold asset allocation should amount to roughly 5 to 10 percent. This asset allocation creates a safely structured portfolio that achieves successful diversification, particularly as gold prices have a strong correlation with U.S. national debt.

How to Add Gold to Your Portfolio

Beyond buying physical bars of gold, there are various instruments available to investors to diversify their portfolio with gold. Before investing in gold and other precious metals, do your research to make an informed decision.

If you’re buying physical gold assets, only buy gold online from a trusted and recognized dealer, and others after you’ve done thorough research beforehand.

With many various gold investments available, it is important to consider all types of gold and their merits and benefits.

Some instruments may better suit your investment needs than others. The instrument vehicle that’s right for your objectives can be determined by understanding the various options available.

Several ways to add gold to your investment portfolio include:

  • Derivatives (Futures, CFD, Spread Betting)
  • Investments in mining companies
  • Gold exchange-traded funds (ETFs)
  • Gold industry stocks and mutual funds
  • Physical gold assets (bullion bars, bullion coins, coin sets, collectors and numismatic coins, jewelry, etc.)

Each instrument will have a certain degree of exposure to risk. Obviously, no investment is without a degree of risk. Knowing your personal risk tolerance will determine what gold instruments are best for your investment portfolio.

Those with a higher appetite for risk may consider investing in derivatives and mining companies for their potentially high gains. Those adverse to volatility will do well with investing in ETFs, funds, and physical gold assets.

With gold occupying 5 to 10 percent of your investment portfolio, your gold assets should be structured in a way that provides your portfolio balance and protection against an economic collapse or geopolitical crisis.

Is Now the Best Time to Buy Gold?

With the U.S. dollar weakened, geopolitical crises at an all-time high, and demand for physical gold and gold ETFs rising in 2018, now is a great time to buy gold. These factors provide staunch bullish indicators that 2018 could be a great year for investors looking to invest in this precious metal.

As a diversifying element, including gold as part of your investment portfolio will ensure you hedge your portfolio in market downturns and global economy disequilibrium. With outlook remaining optimistic, gold will serve to hedge against financial uncertainties, inflation, deflation, and stock market weaknesses in years to come.

About Daniel Fisher 1 Article
Daniel Fisher formed Physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.

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