Gold, of all commodities, has had its hectic ups and downs, so it’s needless to say that investing in precious metals isn’t for the faint of heart. Or is it? There’s a lot of misinterpretation when it comes to precious metals, especially gold. Let’s shed some light on the matter, and see what the pros are saying about investing in gold in the 21st century.
About interest rates
Some analysts are saying that the on-going threat of the Federal Reserve rate hiking is a big reason to avoid investing in precious metals. The reality is that it remains to be seen whether or not the Fed will follow through on this rhetoric of a hike in September 2015. But nominal interest rates do not determine whether precious metals are more or less attractive than interest-bearing debt instruments.
As a retirement option
A gold-backed IRA as a retirement option, is a self-directed IRA that holds precious metals, namely, gold. By diversifying, it adds more stability to your IRA. Adding gold and other precious metals to your portfolio lowers risk by diversifying from paper assets, consequently hedging against the economy and inflation.
Buying low, selling high
Everyone’s heard this term before, and its meaning still holds true today, and frankly, those are words to live by with gold investing. When the Stock Market is uneasy, and starts to take a downturn, a lot of reactions are the same; sell. Sell it all. It is difficult to suppress these reactions, but we all need to do what is counter-intuitive, and that’s when we should be buying. The reason for this is that value price of gold and our economy are inversely related. Our economy is based on currency that is known as fiat, meaning that it is worth only the value of the actual paper it is printed on. So when we experience market decline, stocks and the dollar move downward. They become less desirable. Gold then becomes more desirable and according to the law of supply and demand it’s value increases as well.
Bottom line is that gold is recognized as the true standard of value across the globe. It is a standard for world wide exchange, and has been since the dawn of time. It maintains its value from one country to another, and is not subject to the same systematic risk that the stock market has been known for.