Holding precious metals, especially gold and silver, in an investment portfolio within an independent insured vault is one of the best strategies to ensure your assets are diversified from both portfolio and geographical risk.
It’s no secret that gold has enjoyed a steady uptick in value since November 2018 and has been consolidating since August 2020 Some may say it has been deliberately held back or manipulated by banks in order to cover for the vast amounts of currency printing over this period.
Does this mean investing in gold right now is not the best idea? Depending on your long-term plans, buying gold assets might be precisely what you want to do. Here is some background about what’s happening with gold and why it’s worth considering.
Status of Gold in Today’s Market
During the two years ending in August 2020, the price of gold per ounce increased consistently, with gold reaching a value of USD 2,089.20 per ounce during that month. The trend reversed during 2021, and the value per ounce dropped. This led some to determine that now is not the time to pursue gold as an investment.
It’s important to realize where things stand today before making assumptions about how much of a change has occurred. As of the end of the third quarter of 2021, gold averaged a value of $1,800 per ounce. While that does constitute a drop, the fact that gold remains a viable asset means it is worth including as part of your offshore investments.
Calculating its ‘value’ in fiat currency when trillions are being ‘printed’ and huge amounts of paper gold are being dumped on the markets at vulnerable times tells me that a firesale opportunity to buy at vastly deflated fiat based prices is being offered.
Anticipated Gold Performance in the Short Term
The overall performance of gold in the short term may not lead to spectacular gains. Due to short-term inflation and some concern about investments in general, some investors will decide to step back and see how the market for precious metals moves in the coming year.
It’s important to remember that almost any asset is affected by current events in the economy and the gold and silver markets in particular. While gold, or other investment options, may not provide immediate returns in the current market climate, look at projections for the next five to ten years, and you can see how gold is a good choice. In other words, buying the gold now while it is undervalued and waiting things out, could allow you to enjoy more significant rewards later.
Gold’s Historical Performance
Why do experts think that gold will eventually move out of this consolidation phase and again gain in value? The answer is historical performance. While periods of economic uncertainty can impact gold prices just as they impact other types of investments, gold has shown that it regains lost ground over time.
Looking at the unprecedented valuations in the stock market and opposing undervaluation of physical gold and silver as well as gold and silver miners reminds me of the countercyclical nature of the precious metals. Waiting for the collapse of the markets may not be the cheapest time to buy the precious monetary metals.
Consider gold’s performance since 2001. During that time, the demand for gold increased worldwide by 15% on average. There have been ups and downs, but the overall movement of gold remains upward.
While the current world situation does have the unique element of emerging from a pandemic, most other factors that may influence the worth of assets are like circumstances found in the last several decades. This means reviewing the historical performance from at least the middle of the 20th century can provide insight into what is likely to happen with gold in the next decade. Based on what you think of that history, buying gold now could be perfect for you.
Purchase Gold While the Price Per Ounce is Lower
Why buy now? The price of gold per ounce is lower than it’s been in some time. How long this will last depends on whose projections turn out to be the most accurate. No matter how those projections play out, there’s a good chance that you would not be able to buy gold for the same price this time next year.
Buying now allows you to get into the market while the price is relatively deflated and you will position yourself for the time when the value of gold surpasses today’s price.
Make Gold Part of Your Long-Range Investment Planning
Some of the investments that you make are intended to generate returns quickly. You may hold certain stocks for a few months and then sell them off just as they peak. That allows you to earn returns quickly and then move on to the next big thing.
Part of your portfolio is also composed of assets you plan on buying and holding for years. These may not offer the highest returns, but they are consistent and involve little volatility. These are the foundation of your portfolio, helping to provide long term stability.
You also make some investments when they are not the most popular, with the intent to keep them at least as long as it takes for the price to begin rising again. How long you keep those assets after the increase starts is up to you; it may be weeks, months, or years.
The latter is where you are with gold right now. It’s possible to invest in gold while the price is lower and hold those investments for a time. When gold does begin to increase in value again, you can decide whether to keep it a little longer, sell it, or consider it to be a permanent part of your portfolio.
It is worthwhile considering silver at this juncture as well. Silver is a much more volatile asset, but when gold runs, silver runs faster. Being a much smaller market it is much more easily manipulated and advantage has been taken of that vulnerability by the powers that be.
Silver is trading at less than half the price that it was in 1980. I cannot think of a single item that is half the price that it was 41 years ago. Do you think it may be a little underpriced? The current gold to silver ratio is hovering around 1:80 The miners say it is coming out of the ground at about 1:8.
On that basis alone the price should be ten times the current price. It may be worth considering adding some to your portfolio at these prices.
Decide if Buying Gold Now is Right for You
Ultimately, you are the one who has to decide if adding gold investments to the portfolio is what you want to do.
Keep in mind that while the price of gold in 2021 is not what it was in the two years prior, it’s still a solid investment that’s likely to provide stability for the long term. Gold and Silver in addition to providing stability in a portfolio also act as insurance against systemic risk and can be placed in such a way as to minimize geographic risk.
If your intent for the portfolio is to provide insurance against currency risk during your retirement years, gold is worth your consideration.