Is now a good time to buy gold? Does the political climate help this?
To know the answer to this question, the value of gold has to be understood. Since the beginning of time, gold has pretty much set the international measure of wealth. With 23.2 grains of gold as the standard, the value barely changed from the late 1700s until 1933. The value of gold was incrementally inflated from 1933 to 1972. The devaluation of the dollar and its continual acceleration is the reason that today, gold is more important than ever before.
Now both America and Japan are attempting to lower currencies to help boost exports. This limits imports and takes the demand from trading partners and puts it on themselves. As mentioned above, it is the 1930s that currency advocates regularly invoke as a tale of caution: when retelling the story, countries abandoned the gold and standard, all the while enjoying a devaluation and bringing the world into a protectionism vortex and ultimately an economic shutdown. The answer to the question is it a good time to buy gold in this political climate can be answered in two ways: if the portfolio is in dollars, there will be a hard time keeping up with currency debasement, including QE3 and further. The solution to this is to have as many ounces of gold as possible!
There is of course no textbook answer to these questions. Could the value of gold fall further? Sure. Could you regret it one year from now if you invested in as many ounces of gold as you could? The answer to these questions is simply to buy, while others are selling and to sell, when you see many others buying. But remember one thing: Don’t make attempts to buy at bottom and sell out at the top.
In the thinly traded aftermarket, gold is falling. It can be a hard climb on the way up that can take months, while prices are steadily falling like rocks on the way down. This is something you have to get used too.
Some days, gold will fall at the same time in much the same way. But maybe it rises the day before.
Let’s face it – for centuries now, gold has been seen as one of the best ways for a person to preserve his or her wealth as well as purchasing power. It is a unique investment, and is considered to be real and honest money. It is durable, but rare and holds its value (unlike lesser metals) when passed from person to person and generation to generation.
Today, the beauty of gold is in its ability to make investments more diversified, while protecting wealth.