Is the Gold Price Flashing a Buy Signal?

With everything that’s going on in the world today, it’s no wonder that so many people are nervous about their finances. Since the first bank failures in March, Americans have been moving their money to safety in a way that we haven’t seen in over a decade. And the bad news seems to keep getting worse.

The US government just saw its credit rating downgraded, numerous large banks are at risk of being downgraded, inflation seems to be ticking upward once again, and recent manufacturing surveys are deeply negative. Everything seems to be lining up to give us a major recession, we’re just waiting for the other shoe to drop.

You would think that with all of that, the gold price would be shooting through the roof. Certainly the price of gold did increase earlier this year in the aftermath of the bank failures. But it hasn’t built on that growth. While some nervous investors may wonder if that’s a sign that gold isn’t the safe haven they thought it was, could this momentary weakness in the gold price mean that this is a good time to buy?

Deja Vu All Over Again

This isn’t the first time we’ve seen this happen to gold in the run up to a crisis. In 2008 gold made great strides in the immediate aftermath of the Bear Stearns crisis. But by the time Lehman Brothers failed in September, gold was falling right alongside stock markets.

That’s because gold is a highly liquid asset, and anyone owning gold who needs quick cash can sell it quickly to drum up the funds they need. In September 2008, with the financial system seemingly on the ropes, there were a lot of institutional investors who needed money, and a lot of gold was sold to raise that money.

Gold quickly decoupled and began its resurgence however. By March 2009, gold had once again regained its positive trajectory, with the gold price gaining 25% during the same time period (October 2007 to March 2009) that markets lost over 50% of their value. Could the same thing happen this time around too?

Certainly it could, and there are undoubtedly some people out there who expect it. But there’s no guarantee that gold will either lose or gain in the coming months. Right now markets seem to be in a wait and see period, waiting to see what the Federal Reserve will be doing with interest rates come September, as well as assessing the economic situation in China right now.

We’re also in the middle of August, a traditional time of vacation for both the US and Europe. There are probably millions of people right now who aren’t giving a second thought to their investments, as they’re too busy soaking up sun at the beach. But all that could change in just a few short weeks.

If the next recession ends up being as bad as 2008, this could be the last time that gold is this affordable. In that sense, the gold price is flashing a big “buy me” sign to those who have been sitting on the fence.

A lot of people in 2008 were kicking themselves for not having bought gold when it was $400 or $600 an ounce. A lot of people today are probably kicking themselves for not having bought gold when it was $1,300 an ounce a few years ago. Will people end up looking back a year or two from now and kick themselves for not having bought gold when it was $1,900 an ounce?

Gold’s Performance During Recessions

The 2008 crisis wasn’t the only time gold performed well when the economy was down in the dumps. During the 1970s the gold price grew at an annualized rate of over 30% per year. That kind of growth would be phenomenal for a single year, but to keep that up for a decade is simply amazing.

That growth came in the face of an economy that saw recession, inflation, price controls, oil embargoes, and all manner of hardships. The 1970s were a decade that many would rather forget, but for those who owned gold, it was a great ride.

How to Protect Your Savings With Gold

This kind of performance from gold has many people hopeful that the gold price can repeat that kind of performance in the future. If the US economy faces a crisis like 2008, or if the 2020s end up being a repeat of the stagflationary 1970s, could the gold price perform today as it did back then?

There must be quite a few people out there hoping for that kind of performance, as gold demand picked up in 2020 and really hasn’t leveled off. Investment demand for gold bars and gold coins has been strong for the past several years, and even central banks have gotten in on the action, buying more gold than they have since the 1950s.

But you don’t have to be a central bank or even filthy rich to be able to buy gold. You don’t even need huge piles of cash to be able to do it, although there’s certainly nothing stopping you from making a direct cash purchase of gold.

With a gold IRA, you can buy gold using assets from your existing tax-advantaged retirement accounts, such as a 401(k), 403(b), TSP, IRA, or similar account. Funds from these types of accounts can be rolled over or transferred tax-free into a gold IRA, where they can then be used to buy physical gold coins or gold bars.

You determine the type of gold you want to buy, and your gold IRA custodian will manage it while it’s stored safely and securely in a bullion depository. And when you choose to take a distribution from your gold IRA, you can take it either in cash or in physical gold.

While gold IRAs have only existed since the late 1990s, they’ve become a popular method of buying gold, especially to protect retirement savings. Goldco has helped thousands of customers benefit from starting a gold IRA.

With over $2 billion in precious metals placements and thousands of 5-star reviews, Goldco works hard to ensure that our customers have access to gold options that suit them. Call Goldco today to find out more about how a gold IRA can help you safeguard your financial future.