When it comes to making investments, human nature dictates that most of us will look to buy assets that we believe (and hope) will increase in value. If you were to buy a hot bio-tech stock, for example, at $10 per share you would likely be hoping for the share price to double or more in a relatively short period of time. If you buy a home for $300,000, you certainly would love to see that home appreciate in value over the coming years.
While we believe that physical gold ownership serves a very important purpose in both bull and bear markets, gold investors do also consider the likelihood of higher prices.
Gold has had a very interesting and sometimes volatile history in recent years. To the educated long-term investor, these movements on shorter time frames mean nothing. They recognize the value that gold brings to the table as a potential hedge against geopolitical and economic risks, currency debasement, inflation and loss of purchasing power.
Many investors, however, question if gold is still in an uptrend or if now is a good time to be buying gold.
The answer to this question depends on the time horizon in question…
Over the last five years, gold prices have moved lower from their all-time-highs near $2000 per ounce.
If you are simply looking at the last five years, gold could be considered to be in a bear market and downtrend.
Looking at gold from a 25 year time horizon, however, paints a much different picture. Looking at prices over this time frame, gold appears to be merely pulling back before another possible run higher.