Month: May 2016

The oil industry is experiencing its deepest downturn since the 1990s: the price of a barrel of oil has fallen by more than 70 percent since June 2014, and that’s affecting oil companies.

Their earnings are down, so they’re cutting back on exploration and production. Many have gone bankrupt, and an estimated 250,000 oil workers have lost their jobs. Globally, whole economies are impacted, such as Ukraine, which was relying on a now-canceled $10 billion Chevron project to help stimulate its troubled economy.

When are oil prices likely to recover? Many say not to expect a recovery anytime soon. Oil production is not declining fast enough in the U.S. and other countries to drive up prices. So it could be years before prices return to $90 or $100 a barrel-the norm over the past decade. So what does that mean for you as a consumer?

Gasoline, heating oil, and natural gas prices have fallen. Airline and shipping costs may follow. That means more money in your pocket, and benefits for the economy. According to the International Monetary Fund, a 10 percent decline in the oil price is associated with around a 0.2 percent increase in global gross domestic product as consumers spend their gains.

On the downside, the financial markets are rattled, and that can hurt your portfolio.

In times like these, it’s important to remember that investing is about taking the appropriate view for your particular time horizon. And if you’re saving for a distant retirement, that means adopting a long-term perspective.

Crude oil prices have plunged from more than $100 per barrel in 2014 to under $30 in early 2016. And with the decline, the financial markets around the world have been shaken.

But something else has happened: after falling to a six-year low in December 2015, gold rose by 12 percent in the first two months of 2016.

That’s a bit unusual, because historically oil prices and gold prices have gone up and down together-for good reason. Rising oil prices can lead to inflation, and gold is a store of value.

What’s different this time? One thought is that oil prices have fallen far enough that investors are now worried that companies will go bankrupt, leading to major market declines. So they’re turning to gold for its perceived safety.

Historically, gold has been considered a “safe haven” in times of economic, financial, and geopolitical instability. Unlike financial assets and currency, gold cannot be printed at will.

So should you consider investing in gold now? It does have room to rise.

And gold tends to perform differently from other assets, which is why many advisors recommend gold stocks as a method of diversifying in a portfolio of stocks, bonds, and real estate.

On the other hand, virtually no investment should be considered a sure thing, and gold is no exception. Its price can fluctuate widely. For example, it was priced at around $250 an ounce in the 1990s and is now $1,200 an ounce.

Because of this, it’s a good idea to consult a financial advisor if you want to invest in gold.

It can be a complex undertaking: there are many ways to go, including purchasing gold stocks and/or buying index funds that track gold investment companies or the spot price of gold.

Your advisor, who knows your financial situation, is best able to advise you on how (and whether) to invest in gold.