Gold — and other precious metals — are one of the few assets today that aren’t overvalued. While other stocks approach potentially dangerous bubbles, gold tends to keep stable. Most investors know that buying low and selling high is the key to successful wealth building, but that’s not easy to do if you’re constantly purchasing from overvalued investment classes.
Stocks, Bonds and Real Estate: Overvalued Bubbles
The U.S. stock market is at an all-time high, climbing as much as 220 percent over the 2009 crash, and real estate prices are currently edging past the 2006 peak. While many might tout these signs as strong economic factors, wary investors know that peaks are what come before valleys; home prices soared to highs in 2006 before they plummeted in the 2009/2010 bubble burst.
Home prices aren’t the only thing climbing to an eventual cliff. Stock markets can’t keep rising without some reactionary drops. With almost eight years of steady increase across numerous baskets, the market is definitely overvalued, making it a bad time for large investments in the arena. What goes up, after all, must come down.
Historically, investors in the nation often turned to government bonds for a sure, if not super impressive, long-term yield. The problem with bonds is that yields are down to historic lows, making them a low-value savings proposition. Bonds are also positioned for a potentially devastating bubble burst. Even if the bubble holds, bond prices would fall if yields rise, resulting in potential loss of value for existing investors.
Precious Metals Don’t Bubble
Historically speaking, one of the safest investments for retirement or other wealth-building purposes is in precious metals. Gold and silver prices might trend upward through the years, but they are still undervalued. Gold is 35 percent below the 2011 peak; silver is pricing in at 62 percent below peak — and that’s despite inflation and other pressures that tend to push asset classes toward overvaluation.
You have a higher chance of buying low and selling high with undervalued assets that steadily perform, but that’s not the only benefit of precious metals for investors now. The stability associated with gold and silver is an enormous boon in an economy that features so many signs of imminent bursts.
What are some signs that point to potential economic disaster? Nations — and people — are overloaded with debt, and currency dilution and devaluing seems to be standard operating procedure for many countries. Fiscal budgets remain unbalanced, and investors and others are in constant fear of market crashes and inflation. With real estate knocking on the door of a new bubble, it’s not surprising those in the know are looking for a bedrock to base future finances upon.
Investing in gold and silver can help you create that foundation.