Is Gold a Good Investment in an Uncertain Environment?

The U.S. Federal Reserve is pumping money into the economy to stimulate it after the COVID-19-induced slowdown. That raises fears of inflation, and when people fear inflation, gold often becomes appealing.

Why? Historically, gold has been considered a safe haven in times of geopolitical and financial instability. Unlike financial assets and currency, gold cannot be printed at will. It also tends to perform differently from other assets, which is why investors often use it as diversification in a portfolio of stocks, bonds and real estate.

Might you want to consider gold now? Over the past 10 years, inflation has averaged less than 2% annually, but the recent monetary stimulus and rising national debt mean investors would be wise to prepare for a rise in inflation.

On the other hand, no investment is a sure thing, and gold is no exception. Its price can fluctuate widely. Gold was priced at around $250 an ounce in the 1990s and is close to $2,000 an ounce in September 2020. However, from the 1990s until today, gold prices have been volatile.

Moreover, investing in gold isn’t straightforward. There are many ways to purchase it. You can buy gold, stocks in companies that invest in gold, or even index funds that track companies that invest in gold or the spot price of gold. It can be a complex undertaking.

If you have questions about investing in gold, please give me a call. I would be happy to go over them with you.