The economic conditions around the world are ugly and don’t seem to be getting better anytime soon. The downgrade of US debt rating for the first time in history and predictions that other financial investments will soon follow makes for a very scary financial picture in the US and abroad.
Gold is and has always been a safe haven investment. In this tough economic picture gold continues to climb. Experts are predicting that the US dollar will lose value; that means that money held in US dollars will likely lose value. It is hard to know what to do to preserve your hard earned savings.
Over the last 5 years gold has gone from $600 a troy ounce ozt, and it is now over $1700 ozt. That growth represents nearly a triple on your investment. In any environment a triple over 5 years is very good. In the last year alone the price has gone up over $100 per ozt. As far as the value of a dollar, currencies float against other currencies and that is one measure of the value of the dollar, the other measure of the value of the dollar is in its buying power. Anyone who has gone to the gas pumps or grocery store knows that a dollar doesn’t purchase what it has in the past.
The biggest draw to investing in gold is that in volatile economic times, which we have now, gold holds its value and will likely increase in value. Do we think we are at the top of the chart on gold? Not likely! If we were seeing manageable government debt in the US and abroad and economic growth and stability a topping out of the gold price might be a consideration. What we are actually seeing is a very negative economic climate with unemployment at a very high level, staggering government debt here and in Europe and a stagnant business climate with a few exceptions.
With that scenario it looks like there is a continued demand for safe haven investment and continued upside to the price of gold. Gold can be a way to preserve capital and avoid some of the political and economic instability that is prevalent right now.