With the ups and downs stock markets have taken over the past two years, many investors have been nervous about the stability and security of their investments in stocks. Many investors have sought the safety and security of a precious metals investment, looking to benefit from investing in gold and silver. But many others have held off, hoping to eke out every last penny from stock market rallies before investing in gold and silver.
Those investors have probably watched in disbelief as both gold and silver have made tremendous price gains over the past year. Last April, gold was trading as low as $1,270 per ounce. As of today, the gold price has just pushed to a record high for the first time since 2011, reaching nearly $1,940 an ounce. That’s more than a 50% gain in just over a year.
Silver is showing even better performance, as it was trading at $14.40 an ounce last May, and the silver price is close to $24.30 an ounce today, a nearly 70% gain. For investors who decided to invest in gold and silver at those prices, they’re undoubtedly ecstatic at the gains they made. But many investors (including yours truly), wish they could go back in time and buy a little more gold and silver to add to their portfolios.
There are undoubtedly many investors out there who are looking at the performance of gold and silver today and thinking that they’re too late, that gold and silver are too expensive and that they missed the boat. But that’s not necessarily the case. Here are four reasons it’s not too late to invest in gold and silver.
1. Demand Will Increase
From our economics training we very often analyze supply and demand in terms of price. All other things being equal, a rise in price means demand will fall, and a fall in price means demand will rise. But in this case, a rising gold price signals to investors that gold is breaking out and due for even greater gains in the future. Many investors see that and decide to invest in gold too, and thus demand increases.
Demand will increase for other reasons too, as more and more investors look to invest in gold and silver to protect their wealth. For those who have benefited from the stock market bull run, wealth preservation is now the name of the game. And some of the best assets to preserve wealth, especially during a weak economy, are gold and silver.
2. Supply Can’t Keep Up
The sudden spike in gold and silver prices has an effect on supply too. While miners will undoubtedly want to mine more gold, gold isn’t a resource whose production can be throttled up or down with any speed. Finding more mines takes time, so for right now we’re dependent on existing supply in the market. And with some major producers, such as South Africa, subject to periodic supply disruptions, this continued limited supply will likely also contribute to a higher gold price.
For the supply of physical gold coins and bars, like those that gold IRA investors hold, supply has been similarly disrupted. The US Mint has had to shut down its operations a few times already due to COVID fears, and other mints around the world have had to do the same. With COVID still a threat, any further shutdowns will tighten the supply of gold and silver coins that is already making it hard for investors to find physical precious metals.
3. Recession Is Still Young
While the US economy is already in recession, we’re still in the early phases. Hopes for a V-shaped recovery have been dashed, as states such as California have seen a surge in the number of COVID-19 cases and have reinstated draconian lockdown provisions. Any recovery the US experienced stalled in late June, and the prognosis for the future is grim.
From unemployment to GDP to monetary figures, the numbers for the US economy are staggeringly bad. Unemployment has far surpassed the worst of the 2008 crisis, GDP will likely fall more than at any time since the Great Depression, and the Federal Reserve has intervened with far more money creation than it did during the Great Recession.
The worst part of the current recession could still be months away, meaning that investors still have time to protect their assets. But if they don’t act soon to protect their portfolios with gold and silver, not only could they miss out on gains in precious metals, they could also see significant losses to their stock investments.
4. Growing Fear and Uncertainty
Most people will agree that 2020 has been a crazy year. From COVID-19 to lockdowns to riots and protests to a hotly contested Presidential election, it seems that each month brings a new twist. It’s understandable, then, that many people are fearful about the future.
They don’t know whether they’re still going to have a job next month, whether they’re going to have a roof over their head at the end of the year, or whether taxes will jump if Democrats take full control of the government after the elections. No one knows what to expect, we’re all just rolling with the punches, and 2020 has provided quite a few of those already.
In this atmosphere of fear and uncertainty, it’s only natural for people to flock to safety, stability, and security. When it feels like the whole world is crumbling down around you, you want to find a rock that can anchor you. And while mainstream financial media pundits may deride gold and silver as pretty rocks, there’s no denying that they offer the stability and support than investors look for in times of crisis.
Investing in Gold and Silver
If you’re looking to invest in gold and silver, it’s not too late. Yes, gold may be approaching an all-time high, but it still has plenty of room left to run. With the potential for years of recovery ahead of us, just like post-2008, there’s still a lot of growth left for the gold price.
Silver has even more room for growth. Despite its better performance over the past year than gold, silver is still far below its all-time price. But it stands a far better chance of doubling in price in the near future than gold does, as it often outperforms gold percentagewise when making big gains.
Just because gold and silver have a long bull run ahead of them doesn’t mean you should drag your feet before deciding to invest. If you’re thinking about investing in gold and silver, make your move before gold and silver climb any higher and before stock markets crash. Don’t let any more time pass before you protect your retirement savings.