As much as we’ve heard that there’s no such thing as timing markets, there’s always at least one time that’s better than others to buy certain assets. You don’t want to buy when everyone else is panic-buying, as you’ll likely be overpaying. Nor do you want to buy when everyone else is selling, as you may be buying into major losses. But by observing what others are doing, you can figure out when is a good time to buy.
For gold, many investors undoubtedly think the time to buy has passed. Had they bought last year, when the gold price was at $1,270 an ounce, they would have made pretty significant gains. Even if they had bought at the beginning of this year, when gold was around $1,500 an ounce, they would have seen great gains. But now that gold has broken its record highs and is still trading around $2,000 an ounce, some investors are wondering if it’s really such a good idea to buy gold at these high valuations. Here are three reasons why now is the right time to buy gold.
1. People You’d Least Expect Are Buying
In the mainstream financial world, there’s no love lost for gold. Mention that you’re investing in gold to someone in the mainstream and you’ll be met with a condescending smirk and a derisive comment about how much better stocks are for building wealth. Never mind the fact that gold has actually more than doubled the average annual performance of stocks this century.
But even the most hardened gold anti-bugs come around at some point, and now is the time. You’re probably already familiar with Warren Buffett’s purchase of over $500 million in Barrick Gold stock. Buffett has never been a fan of gold, but with gold pushing to record highs and looking to keep climbing, he sees what that could do for Barrick’s bottom line.
Then there’s the Ohio Police & Fire Pension Fund, which manages $16 billion in pension assets. The fund has announced that it has approved an allocation of 5% of the fund’s portfolio to gold, stating its intention both to diversify the fund’s portfolio and to hedge against inflation.
These may seem like baby steps, but that’s why this is the time to buy gold. Buying while everyone else is still unaware of the growth potential of gold or just learning about it is the time to get in on the ground floor. Once everyone else rushes into the market, you’ve missed out on the opportunity to make the biggest gains.
2. You Can Still Find Gold
Almost all the gold that has ever been mined still exists above ground. But while that totals about $12 trillion in nominal value (6 billion ounces), the majority of that gold isn’t available to investors. Between jewelry holdings, official gold reserves, and gold already held by investors, many estimate that the total size of the gold market that is actually liquid is no more than $1 trillion. Compare that to the Dow Jones Industrial Average, which has a market capitalization of over $8 trillion, or the S&P 500, which has a market capitalization of over $27 trillion.
When stock markets begin to slide, there could be a huge flood of money flowing from stock market investments into gold. With so much money out there right now, it’s almost guaranteed that the gold price will be bid up to enormous heights.
Right now you can still find gold. But supply difficulties as a result of COVID fears could lead to world mints producing fewer gold coins in the coming months. When that flood of demand hits, you may be hard pressed to find gold coins available for sale, and you’re almost guaranteed to see the gold price skyrocket as a result. Buying gold now means not having to worry about being able to find gold to buy in the future.
3. Maximize Gains, Minimize Losses
With stock markets having recovered from their losses earlier in the year, investors have been given yet another chance to lock in any stock market gains they’ve made and invest their wealth in assets that will protect them against loss. This is an opportunity that previous generations haven’t had, the ample warning ahead of time that a stock market crash is on the way and the impetus to get out and protect your assets.
If you’re the average American investor, your 401(k) or IRA retirement accounts are probably as flush as they ever have been. Isn’t it time to start thinking about protecting the assets in those accounts and moving some of your assets to the safety of gold?
With a 401(k) rollover, you can easily roll over your existing retirement assets into a gold IRA, giving you the same tax advantages of a conventional IRA account while allowing you to invest in physical gold coins and bars. By investing in gold today, you’ll be moving out of stocks at what could end up being their peak valuation and moving them into gold at a time when gold is poised for a breakout.
Time is of the essence, however. Markets right now are in a state of suspended animation due to trillions of dollars of Federal Reserve stimulus. All that money flooding the financial system has boosted stock markets and delayed the inevitable crash. But markets won’t stay that way forever. The crash will come, and when it does, those who haven’t protected their assets could sustain massive losses.
Investors during the financial crisis of 2008 watched in horror as stock indexes lost over half their value. And lest we forget, the dotcom bubble saw losses nearly as large. Now we’re on the verge of a third stock market collapse in two decades. Are you prepared?
No one wants to lose retirement savings that have been decades in the making. And with a solution as simple as investing in gold, whether it’s rolling over a 401(k) or investing other assets, there’s no reason not to take the right steps today and keep your wealth out of harm’s way.