The price of gold rose slightly on Monday, ending a month-long decline after the US jobs report sent prices tumbling on fears the Federal Reserve would keep interest rates high; although whether or not it is the safe haven for investors wary of the recession remains in doubt gold ira companies reviews.
Gold is often seen as a safe haven for investors during times when other markets and economies face challenges. And during inflation, gold is considered a hedge against it. When inflation starts to outpace interest rates, investors look to put their money into more stable investments.
Gold can also serve as a hedge against recessions. When stocks plummet, investors start flocking to gold to increase its value.
Although there are also other metals available to investors, gold has had a more consistent performance, especially compared to silver, which is more volatile and can suffer from economic downturns because it has more industrial uses, according to a report from Morgan Stanley.
How to invest in gold
Buyers who wish to invest in gold can do so in three ways. Gold bars and coins can be purchased online through authorized retailers, although investors are responsible for their own storage. For those not willing to purchase physical gold, gold exchange-traded funds (ETFs) allow the buyer to gain exposure to gold as an asset class. Another way to get into gold investing is to buy gold-related stocks, such as mining companies, in the same way you can buy stocks of technology companies.
Negative aspects
For the last 50 years – when President Nixon eliminated the gold standard to curb inflation – gold was considered a hedge against inflation. But data shows that the relationship between the price of gold and the consumer price index has fluctuated, like any other asset, according to a Wall Street Journal report, and has not always proven to be a reliable safe bet. Research from Duke University also shows that gold only serves as a hedge against inflation over long periods of time, while its real price fluctuates like that of any other asset.
Gold and silver have long been a means for scammers to dupe unsuspecting victims into purchasing the precious metals at an extremely inflated price. They often employ fear tactics, such as economic downturns and lately the pandemic, to persuade people to invest in their precious metals.
The Commodity Futures Trading Commission ( CFTC) published a notice informing people not to take money out of their retirement accounts to invest in gold, silver and other precious metals without first consulting a financial advisor.
The CFTC also has guidelines on how to spot scammers seeking to sell gold bars and coins and “collectible” coins, the authenticity and market value of which are difficult to verify.