It may be no surprise to some of you that gold has become a hot investment item in recent years. The movement encouraging gold buying is enormous. Financial experts in some quarters are saying that gold is the asset to buy at the moment. Television personalities, celebrities, and other specialized gold dealers are all getting the word out about gold. The important point is that they are telling investors to buy gold to protect themselves against the falling value of the dollar. Others look at gold as a means to address inflation concerns. So, is it really time to invest into gold?
Do you have the gold buying fever?
Expert investors and ordinary investors alike have been seized by a kind of gold fever. At current prices, gold is selling for just over $1,400 an ounce. This is part of a decade long trend in the precious metals markets that have more investors including larger percentages in their portfolios. Gold, in particular, is making up a significant share of investor portfolios.
Would a, Could a, Should a…
For those who chose to invest in gold only a few years ago at prices between $700 and $800 have reaped excellent financial gains. Even those who got in the markets late in the game have been able to post serious gains as the price has gone up. Yet, there are some questions about how long these price increases will continue. There are some experts speculating that this is a gold market bubble. As such, it is bound to burst. There are good reasons to think that now is really not the best time to invest in gold.
Gold Bubble
This bubble is being caused by too many investors jumping into the markets. Some would say that this lessened gold’s ultimate value as an investment. People are being carried away by the euphoric price increases and the seeming endlessness of the upward trend. Of course, for anyone who’s really paid attention, the fact it’s being described as a bubble should give one reason to pause. Do you remember tech bubble of the 1990s or maybe the housing bubble that has more recently burst?
There are good reasons to think that following the pack may be a bad idea. Investors may be smarter to look in another direction. The fact is that there are some serious downsides to investing in gold. It is a matter of history that when gold has experienced serious price spikes it has also experience significant declines in subsequent years. A crash in gold prices is inevitable. As the economy recovers and consumer confidence improves this outcome may be assured. There is risk involved if you decide to starting investing in this market.
Other Areas to Invest
There are some good reasons to move away from precious metals at the moment and start looking in other areas of investments. Investors could be more stable investment opportunities in undervalued assets. This could be oil or steel, both of which have the potential for capital appreciation in the coming years.