Investing in Gold: A Case for Why You Should Buy Gold Now

By Richard Hemby, on January 20, 2010

Given recent economic news, more and more investors are turning to gold as a way to preserve the value of their financial portfolio. Gold has traditionally been considered a safe haven for investment, since it tends to maintain its value during times of economic crisis and upheaval. Gold is an especially good hedge against inflation since it is valuable in itself, and thus can protect against dips in the value of currency. Gold prices also tend to vary inversely with the performance of international stock markets, rising when overall stock prices are falling. Recent years have borne out this theory, with gold increasing dramatically in value; gold prices have risen nearly 300% since 2001.

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Gold remains an excellent investment despite current high prices; this is due to a number of factors, including gold’s continued appreciation on the market, the weak American dollar, and the current uncertain economic conditions throughout the world. Gold is still in high demand, especially in markets like India and China, and this trend is not expected to slow in the foreseeable future. Additionally, gold’s recent rise in value occurred during a period when the overall economy was not experiencing significant inflation. Many experts feel that the U.S. economy and perhaps the world economic markets are heading for a period of inflation; gold will likely increase in value much more when and if this inflation occurs.

Another reason to invest in gold now is the diminishing supply. Gold mines are producing less in recent years; the annual worldwide production has decreased by almost 10% since 2001. Environmental restrictions and political concerns limit the opening of new mines, virtually ensuring that this trend will continue well into the future. At the same time, demand has never been higher for gold and other precious metals. Large scale investors are hedging their other investments with significant purchases of gold; in fact, a comparison of the first half of 2008 with the first half of 2009 showed that gold sales were up 150% in the later year.

Perhaps the most compelling argument for buying gold now rather than delaying is the current political push toward a return to gold-backed currencies. Current international economic woes have created a political movement to guarantee currency with real assets like gold. If only a few of the nations considering such a move were to follow through, the world gold supply would be under extreme pressure, and prices would rise as a direct result. For investors, delay in purchasing gold is likely to result in paying higher prices down the line; thus, there’s never been a better time to get into the gold market than now.

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Richard Hemby is a freelance writer thats contributes to OnlineCollegeGuru.org, a guide to accredited online colleges.

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