Gold – it is discussed among consumers and investors alike, but not many know much about this precious metal and how to invest in it. With the rumors of a recession arriving right around the corner, the talk about buying gold has only increased. Read on to find out about what is going on, and what we know about the gold buying craze.
Advantages of Buying Gold
The main reason investors buy gold is that it is considered a safe haven, especially during hard economic times. The price of gold generally goes up after a financial collapse, and those that were prepared made a profit from the crisis.
Investing in gold also grants leverage and insurance to those who possess it. During crashes in the market, housing or banking systems may collapse, but gold remains unscathed throughout economic calamities. It is often treated as a “go-to” commodity when things are beginning to look bad.
Disadvantages of Buying Gold
There is a demand for gold due to limited supply in the market, meaning that fewer traders can drive the prices up. Like many markets and investments, gold is also prone to becoming an asset bubble because there is no specific intrinsic value. Rarity and mining costs often determine the value of gold, but that is still uncertain.
Who Should Buy Gold
Anyone who wants to build a portfolio and have enough for the initial investment. They can take advantage of the short-term price changes, and need to master the art of spotting arbitrage opportunities. Arbitrage is the act of buying from one market while simultaneously selling it in another market at a higher price.
When Is it the Right Time to Buy Gold?
Investors say that the best time to buy gold is when it is at its lowest price, typically at the beginning of the year. There is some truth to those words, but the right time to buy gold isn’t the same for everyone. Gold buyers should not wait too long to invest and only buy gold when they have the means.
Remember, when buying gold as insurance, begin buying as soon as the economy starts to fall. Avoid buying gold when the stock market has crashed for some time; by then, it is far too expensive and too late.
The Bottom Line
Like many investments, it is a profitable endeavor in preparation of rough economic times, especially in our foreseeable future. For those that want to participate in the investment game, focus, research, and common sense are the most valuable skills for handling gold.