Gold is often bought to hedge against economic, geopolitical or currency crises. Gold has a tendency to move in the opposite direction of investor sentiment and often rises in the face of declining risk assets.
Investors’ tendency to flock to gold during turbulent and uncertain times was quite evident the last several weeks. In fact, the U.S. Mint reported significant American gold eagle coin sales in January, up a whopping 53 percent from last January.
The mint reported sales of 124,000 ounces of American gold eagle coins, the highest level seen since September.
What was happening in September? Let us refresh your memory…Stocks declined sharply in August and September as worries over the Chinese economy caused massive volatility in Chinese markets that spilled over to other global equity markets.
Gold bullion was bought heavily in September and is being heavily bought now.
Coincidence? We think not…
Silver didn’t want to miss the party either. In January, sales of American silver eagles were reported to have reached their highest level since January 2013, seeing sales of 5,954,500 ounces last month. This figure represents a close to eight percent increase year-over-year.
Further coincidence? Not likely…
In reality, the significant rise in demand should come as no surprise. In our view, gold and silver represent tremendous long-term values at current price levels. As investors begin to reallocate assets at the beginning of the new year, seeing capital put to work in gold and silver bullion is by no means shocking.
There are other very powerful forces at work currently, however, that could potentially drive demand for gold and silver through the roof. Concerns over the world’s second largest economy (China) are taking a large toll. Massive volatility seen in Chinese equities is not doing any favors for risk appetite.
Deflationary forces also appear to be taking hold. Crude oil is is at levels last seen over a decade ago. Copper, grains and other commodities are also feeling the effects of lower demand. As a result, many emerging market economies are in serious trouble.
There is a global disconnect as the U.S. recently put an end to its zero interest rate monetary policy while other nations such as China and the EU continue taking measures designed to bolster their economies.
If all of that is not enough, the U.S. has an upcoming Presidential election that may only add to investor angst and uncertainty.
All of these factors combined could potentially make for some extremely treacherous markets.
What will you do to protect your wealth and how might you attempt to insulate your portfolio from what could possibly be a period of significant losses in equity markets and investor value?
It appears that many investors are turning to gold and silver…
Gold and silver have been relied on for thousands of years as a store of value and protector of wealth. These precious metals carry no counterparty risk and cannot default or go bankrupt. Gold and silver can potentially hedge against losses in equities and may rise in value during uncertain times.
A rise in prices for gold and silver could potentially occur quickly and ferociously as investor demand increases.
The question is: Will you buy gold at $1130 per ounce or $1500 per ounce? Will you buy silver at $14.30 per ounce or $25 per ounce?
Don’t simply stick your head in the sand and ignore what you see happening in global markets right now.
Now is a time to be proactive and flexible. Now is a time to take defensive measures. Now is a time to consider and allocation in physical gold or silver.
Acquiring physical, tangible precious metals is simple and convenient. Don’t wait for prices to rise sharply. Explore your options today. Speak with an Advantage Gold representative while prices are still at current levels. Our precious metals account executives will answer any questions you may have about investing in physical gold or silver and will show you how to use your IRA account to build a portfolio of physical precious metals. Call us today at 1-800-341-8584.