This article is a guest post by Shaun Connell.
One of the things that can consistently make investing a difficult practice is timing. If it was easy to time everything perfectly, then everyone would be doing it and we would all be rich. Unfortunately, there are no exact answers on when you should invest in gold. There are some things to keep in mind, though, that will help you determine the right time for you to get involved.
In the end, the question of investing in gold right now comes down to your opinions regarding economics, and the future of the dollar. Do you think that it’s going to be strong in the coming months? Do you think that the down slide is bound to continue? These are questions certainly worth taking into account.
What’s the fate of the US economy?
This is a big question to chew on and it’s one that you won’t have a definitive answer for — like all investments, this is where the risk comes into play. It depends upon how you understand the economy and where you see things going next. Some people who are considered experts within the economics field will tell you that the US economy is heading for some trouble in the coming months.
Everyone knows that things have been rough for the last little while, but many people feel as if the worst might be in front of the American economy. Your thoughts on investing in gold are closely tied to your thoughts on the direction of the economy, so make sure that you understand it as well as possible.
Buying now if you feel the dollar’s headed for a slide
With some strong Asian markets starting to emerge and many other global currencies taking control in today’s world, the American dollar is looking weaker than ever. Many investors feel as if the dollar is just doomed to failure. There are signs pointing to large scale inflation in the coming years, even outpacing the current rates of inflation that we are experiencing.
For investors who feel like this is a likely scenario, the best advice is to buy gold as quickly as you can. Getting in when the price is low is a key, because that will increase your profit margins when it comes time to sell that gold way down the road.
Investing ahead of the curve
The markets work in a highly speculative way. If some big piece of news hits the wire and indicates that the economy is going down the tubes, then people are going to pick up on that and start buying gold. This will ultimately push the price higher and it will make it a tougher go for all folks who want to own gold. The best time to invest in gold is ahead of this curve. You have to be savvy to be a successful investor and this is what being savvy is all about.
If you feel strongly that the US dollar will not stand the test of time and that inflation is going to be a big factor, then you must go ahead and make the investments before that comes to fruition.
Holding off in case of a resurgence
There are investors out on the market today who do not share this view that the American economy is going down the drain. These people might feel like the reports are overblown and that people predicting doom do not understand the strength of the American machine. Though this view might be slightly misguided in light of what we know right now about the economy, it is one that’s worth taking into account.
If this happens to be where you stand on the future of the American dollar, then you wouldn’t want to invest in gold products. Common sense tells us that a renewed American strength would push the price of gold lower, so buying right now would be a poor idea in that case.
Some individuals might want to hold off on buying gold for just a little while if they think that the US dollar is in for a small jump that won’t last long. If you think that we are going to see a short, temporary rebuilding of the American economy before falling down again, then you could wait a few years to buy gold, hoping to spot a nice price entry point and take your profits from there. The key, of course, is timing and following your own economic principles in this regard.
Summarizing the situation
Nothing is incredibly cut and dry when it comes to gold investing. Different investors have different viewpoints on where we are headed, so it makes sense that these investors would bump heads on their gold strategy. Those who are looking at the data and seeing a tough time ahead for the dollar know that right now is the best time to load up on more gold assets. They are empowering themselves for the future and planning for the long term.
Those people who think the American economy is bound to recover would not share this approach, and they would want to sell their gold assets right now, as the price will never be higher if the dollar recovers.
Kyle C.’s Thoughts: I guess I am one of “those people”, if I had gold assets I would have sold them, not all of them, but a good chunk. Last time I checked buying something when it is at its most expensive is a bad idea.
Photo: motoyen
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