The Best Time to Get in to Gold and Silver: Yesterday

Thursday, February 11, 2016

gold and silver coins

Move over, 1849: there just may be a new gold rush in town.

Gold is at a one-year high after surging some 4% early Thursday, driving prices over $1,200 per troy ounce and showing that there are some sectors in this current economy that might surge—although that’s not necessarily good news for the economy at large.

It’s not just gold, either. Silver has risen to a high since November 2015.

Yahoo News points out that concerns over a low dollar and U.S. treasury yields have forced safe haven investors to look elsewhere for stability.

Gold as a Hedge from Panic

According to Telegraph Money, ETF Securities is saying that investors have poured some hundreds of millions of pounds into its gold tracking fund, Gold Bullion Securities. Investments are at their highest level since 2009, at the tail end of the most recent global market crisis.

What’s driving the demand? Concerns over the global economy. Because gold is seen as a hedge against inflation and a hedge against a drop in the stock market, demand tends to go up in times of economic volatility, driving up prices.

The Problem: Less Trust in Central Banks

With Sweden’s central bank lowering interest rates “even further below zero,” according to Bloomberg.com, it’s becoming evident that the banking powers across the globe are still looking to prop up stagnant economies and stocks by setting interest policy. Because “zero percent” rates have been so ineffective, we’re seeing more and more countries consider negative interest rates—and there is some fear that this may become something of a new normal in the world of interest rates.

It doesn’t help that Federal Reserve chairperson Janet Yellen recently expressed some caution about the U.S. economy. For an already-fragile market that easily tumbles on global concerns, those words cut sharply. As of the writing of this article, stocks have yet to recover from this latest tumble all across the globe.

Is Now a Good Time to Get in to Gold and Silver?

When prices jump like this, the only certain thing that can be said is that the best time to get into gold and silver was at their recent lows—before they jumped up. But gold and silver investors are flocking to the precious metals because of concerns about instability in the world markets and in bank policy—and it appears that those concerns aren’t going to go away any time soon.

Knowing when to get in is not easy. It’s possible that gold and silver fluctuate and that today’s highs aren’t necessarily the ideal time to get involved. What you have to do is move your thinking to long-term trends. Do you share concerns that the global banks are going to continue their monetary policies? Are you willing to bet on the stock markets in 2016, given what a shaky start they’ve had?

The best time to get in to gold and silver might have been yesterday, but that doesn’t necessarily today or even tomorrow are bad times to invest in the precious metals, either.

Joshua Rodriguez

Joshua Rodriguez is an avid financial professional. He is the owner and founder of CNA Finance, a partner at Modest Money, and a writer for US News & World Report, Investing.com, and more! Joshua takes a strong fundamental approach to market analysis and enjoys offering his take on what we can expect moving forward. You can reach Joshua at cnafinancehelp@gmail.com.