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KellyB | KellyB

Is Investing in Gold a Good Idea in the Second Half of 2019?

Mar 15th 2019 at 1:21 AM

investing in gold

Once again, the economic landscape is changing, thus leaving many a novice as well as experienced investors wondering what their best bet would be. Especially since the rise of cryptocurrencies, the traditional ways of investing and saving have not only fiddled with the mindsets of investors, but the market itself has changed to meet the novel currencies. Now, younger enthusiasts are much more eager to consider the likes of Bitcoin to diversify, while those with more investing expertise under their belt still put their trust with somewhat overshadowed gold.

This particular precious metal is once again in the spotlight, despite its decrease in popularity in certain regions of the world, but also thanks to numerous economic uncertainties that have caused many to reconsider their decisions. If you’re still wondering if this is your best bet for the rest of 2019, let’s take a look at a few reasons to support this investing decision.

The price is right

Gold has always been considered a high-value commodity, once used in trading, and now as a security measure in savings and a perfect safety net for all those economic plummets that might ensue. While those who are not directly involved in the flows of economy cannot possibly predict a crisis, the stock market movements and foreign exchange trade all serve as pointers as to whether our economy is flourishing or not – and whenever there’s uncertainty, gold is an asset worth investing in.

Specifically, in the last several years, the gold mining industry has experienced a significant low, and many a mining company is struggling to make ends meet. With limited supplies and prices still getting lower, these several months are actually a very fertile ground for purchasing gold, both in its physical form as bullions, or for turning a profit.

Limited supply of precious metals

We already know that the price and, more importantly, the inherent value of gold comes primarily from the fact that there are finite supplies of it in the world. However, in addition to our limited access to it, global political and economic situations also affect its availability as well as its value in the market. For instance, other precious metals such as platinum are also considered a valued investment in the upcoming period, due to the uncertain political climate in its main country of production, South Africa.

Both of these metals are considered rare and scarce, and in case of a significant political change in one of the leading countries of origin, their value would instantly skyrocket. That, in turn, would give a significant advantage to those who possess such rare metals, as the demand would turn to them, while the prices would soar. Whether it’s gold, platinum, or a similar precious metal, owning physical reserves would make for an incredible “cushion” for any economic blow that might occur.

The relationship with the US dollar

As gold is tied to the currency of the US dollar, and the ever-changing nature of the foreign exchange market constantly pushes it to fluctuate from being weak to being strong, gold is also prone to certain oscillations in prices. When the dollar is strong, gold loses a portion of its value, while when the situation is the opposite and the dollar weakens while facing a potential inflation, the value of gold rises.

Many experienced traders can predict to a certain extent that the US dollar is once again going to experience a drop in value, which opens the doors to gold and other rare metals to steal the spotlight for investors. So, simply put, if you wish to make sure that your timing is right for investing in gold, take a close look at how fiat currencies, dollar in particular, are behaving. That will be your signal to use the opportunity and invest at the right moment.

A great time for diversification

Although we all hope nothing will cause another global financial crisis, such as the one that plagued the world a decade ago, current political issues certainly show that sticking to a single market for investing would be unwise. As soon as any sign of instability is easy to spot, it’s high time to invest in several different sources. Or to paint a picture, it’s your cue to put your eggs in several different baskets.

The sheer fact that metals such as gold and platinum reside in their own little trading universe, partially protected by their scarcity, helps every trader build a stronger portfolio through diversification. If you’ve invested in a certain currency, or real estate, for example, and the value of those investments suddenly plummet, your gold bullion would make for a fine buffer and a source of value. Although you should never assume that gold is a perfectly stable currency, as much as any metal can be, it makes for a smart way to spread your wings and strengthen your investment efforts.

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