The Gold Bugs are Biting (again)
Posted by Steve
As worries about the European debt crisis mount, many investors are still looking for investment safety. Gold has always been seen as a hedge against all kinds of economic woes, and as you’re probably aware, gold prices usually surge in times of crisis. True to form, gold prices have jumped 15 percent since February and are nearly double the prices of late 2007.
The recent surges in gold buying are encouraged by a host of fresh advertising hawking gold on television, and through the internet and telemarketing companies.
So, is it time to start buying gold?
Not so fast. Of course, we all know that much of the current hype is designed to prey on the public’s fears of inflation while promoting gold as a safe and valid method of hedging against financial losses. That explains why some of the most popular gold funds have attracted large numbers of new investors and their dollars within the last year. But, it’s important to recognize that while gold does benefit from being classified as a ‘hard’ asset, which is different from securities or paper currency, it is still extremely volatile as an investment.
Some of the most significant price drops in gold have occurred quickly after the largest financial crises, including the inflation crisis of the 1970s. Specifically, in 1976, gold prices started to rise from a low and peaked at $850 in January 1980. Shortly after, the price quickly fell below $500 and continued a long slide, finally bottoming out at $263 in January 2001. That’s a relatively short time frame for such dynamic price changes.
Still, some investors feel that owning the precious metal is like ‘money in the bank’. Whether you want to invest in gold or not, there are a number of ways to do it safely. We can’t emphasize careful investing enough and we’re here to help you do do just that so your financial wealth will be available for you down the road.
Just for the record, ‘cashing in on the gold rush’ is just another investment illusion.
Filed Under: PRecious Metals