Gold: Invest Now Or Wait For Better Times?

Gold is one commodity highly influenced by supply and demand, but more importantly by speculation. Over time, gold has been used either as an inflation hedge or money, which means that this metal will exist as long as we have a reason to buy, sell or trade it.

According to Wall Street Journal’s financial experts, gold is not worth investing in, not even after this metal’s worth has increased by 70% in three years. Charles Rotblut, vice-president for the American Association of Individual Investors along with other financial analysts has reached the conclusion that the value of gold is determined by what the prospective buyer is offering, but the best insight is offered by Eleanor Blayney, consumer advocate of the Certified Financial Planner Board of Standards, Wall Street Journal show.

She compares gold to marbles by telling a story from her childhood. In short, even if she was lucky enough to find a gold coin when she was a child, the other kids still preferred to trade and play with marbles. Fast-forward a few decades, this situation hasn’t changed; people still prefer to use money and turn to gold only when the economy is unsure. Therefore, as difficult an asset as it may be, mainly because its value cannot be properly determined, gold is a keeper.

Gold, safety net in times of financial crisis

2013 is not a good year for gold, as The Guardian shows but although this metal has gone through its first major fall since 2000 and drastically decreased its value, history proves that gold is the go-to solution when currency and shares are facing a threat. For example, September 2011 is a memorable day since an ounce of gold hit the record price of $1,921, The Guardian reports. History also teaches us that gold was the only constant in a sea of financial variables and the fact that this metal survived so many crises might mean that its purpose is to diminish high inflation.

However, as true as this may be, it is also true that it does not stand for any income. In February 2012, Warren Buffett sent a letter to his investors in which, among other things, he said that “if you own one ounce of gold for an eternity, you will still own one ounce at its end”.

Probably the most revealing statement belongs to Uri Landesman, president of Platinum Partners hedge fund, according to whom “gold is a place where people go when they are scared of other assets”, The Guardian reports. Whether it’s to hedge or diminish risks, gold is a safety net which plenty of people promise to have and to hold.

Gold, a barometer for financial improvement

Among other purposes, gold is also a barometer for financial confidence; you know the situation is improving when the price of gold decreases; therefore, the fact that 2013 was not a good year for gold might mean that we are heading for financial improvement.

All in all, this means that gold is currently an asset which should be kept safe, not purchased. And while making transaction with this precious metal is not a good idea during times of stability, locking it somewhere and forgetting about it until you need it could work. In order to give importance to the words scattered above, knowing that World Gold Council is an authority which encourages people to invest in gold is one soothing thought.