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Is It Worth Investing in Gold?

Gold has had a tough time in the market recently. So much of a tough time in fact that investors are starting to ask whether or not it’s even worth the time and money to buy gold anymore. While deciding whether or not to invest in gold may have been a toss-up a year ago, today the story is very different. Today, we’re going to talk about the state of the US economy, the state of the US Markets, and why gold investing is definitely a good idea at the moment. So, let’s get right to it.

United States Markets Aren’t Doing So Great This Year

Throughout the past several years, investors have enjoyed a very strong United States stock market. Fueled by economic stimulus put in place by the Federal Reserve, excessively risky investments sent stock prices soaring. However, the bull market seems to be screeching to a halt this year. While we have seen slight upward growth, the market is simply under-performing when compared to what we’ve seen throughout the past several years; and to be honest, this really makes sense.

The reality is that the economic stimulus put into place by the Federal Reserve made bonds lose their luster while making excessive risk taking in the stock market more of a normal trading excessive. As a result, the stock market started booming. However, underlying factors like consumer spending, home sales, exports, and more simply couldn’t keep up the pace. So, what we ended up with was a booming stock market leading to dangerously high valuations. Now, investors seem to be noticing the dangers of pushing the market higher; and have started taking a break from the excessive risk taking.

The United States Economy Is In For a Shock

Another crucial factor that plays a role in how markets perform is the performance of the economy. While jobs growth seems to be stabilizing, there are still several red flags with regard to the health of the United States economy. First off, consumers simply aren’t spending enough money; and considering that consumer spending is the single most crucial factor in the growth of the US economy, this is a major issue. Another important fact to note is that exports from the United States have been dwindling. The reality is that without exports, new money isn’t coming into the economy quite as fast; leading to lack luster growth in GDP.

Then There’s the Federal Reserve’s Interest Rate

To top things off, the Federal Reserve is planning on increasing its interest rate by the end of the year. The low interest rate put into place in the depths of the financial crisis of 2008 and 2009 that sent the bull market into full swing is now going away. When this happens, investors will be forced to take a step back and think more carefully about the risks they’re willing to take when they trade.

This Leads Us to Gold

invest in gold

Keeping everything above in mind, let’s talk about gold. Gold is a safe haven investment; the type of investment that investors flock to in poor economic times or under poor market conditions. Considering everything that’s going on with overvaluations in the market, under-performing economic data in the United States, and the Federal Reserve interest rate increase coming soon, it only makes sense that the blues are coming for the market soon. As a result, investors are likely to look toward gold as a way to keep their funds safe. So, by the end of the year, I’m expecting to see a nice spike in the value of gold; leading to incredible profits for those that take advantage of the trend.

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What Do You Think?

Do you think investing in gold is worthwhile? Let us know in the comments below!

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About the author

James

1 Comment

  • Gold is not an investment. It is a hedge against deflation of currency since it is recognized as currency even when government policy is not. Gold rises in value because currency drops, so you never have more wealth; you just have no losses.

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