Among all the precious metals, gold is the most widely accepted as an investment. Gold has long been used as a hedge against economic downturn, massive government deficits, unemployment, inflation, war, and social unrest. In the past, investors rarely considered gold for any financial portfolio because the other financial instruments were doing so well. But, with the stock market undergoing a rollercoaster ride over the last five to six years, many people are now starting to consider investing in gold.
With all that’s happening in the global economy, people are beginning to recognize the need to have a mixture of investments in order to handle the inherent risks of all financial projects. In times of economic crisis, investors generally turn to two kinds of “safety refuge” to park their money – the U.S. dollar and gold. While the U.S. dollar has been the popular refuge of choice of investors for generations, gold has been seen as the ultimate hedge against economic instability. Gold investing, however, requires proper management to make consistent profits and mind-blowing leverages. Learning the ropes of gold investment management can be quite difficult at first. But, if you know how the value of gold is affected by changes in economic conditions, this part is not a hard nut to crack.
First, you have to know that the value of dollar is inversely proportional to gold. When the dollar is strong and the economy is on the rise, the prices of gold tend to plummet. On the other hand, when the dollar is weak due to surging national debt, increased foreclosure rates, devastating natural disasters, war, etc. the prices of gold tend to skyrocket. Gold investment management requires that you know when is the right time to sell your gold or buy gold based on the circumstances.
Selling Gold during Bad Economy
If you have already invested in a lot of gold, perhaps one of your concerns is whether the moment is right to start selling it. Indeed, it’s very tempting to sell gold when the price is high. However, good management of gold investments means holding your horses during severe recession. Why? Because even though you can sell your gold at higher rates compared to when you bought it, economic crisis reduces the number of people who are willing to spend money on gold. What is more, even if you get some people interested in buying your precious metal, they’ll most likely negotiate and ask you to cut down the price. Hence, a rising price is not a good reason to sell gold.
So, when is the best time to sell gold? Only you can determine the “best time” to sell your precious metal. But generally, it will really depend on your purpose for holding gold and your individual situation. Most investors’ purpose for holding gold is to retain their asset value. Given that you have the same purpose, when life throws you a curveball which forces you to utilize some of your assets, then it’s a good time to sell your gold. In a nutshell, gold investment management means selling gold not based on the price but on the purpose.
Buying Gold During Tough Financial Times
If you’re curious whether buying gold in the middle of credit crunch is a good idea, here’s a tip – the best time to buy gold is when everybody else is not interested to buy. Even though gold prices are steadily increasing in the presence of economic collapse, this commodity can be easily found among investors. Because the price is great, many are willing to sell. Because many are willing to sell, you can easily negotiate for a lower price and hence, increase your investments. Just as what Warren Buffett once said, “You can’t buy what is popular and do well.” Again, the best time to buy gold is when no one wants to buy.
Gold investment management basically revolves around these concepts. Investing in gold is a surefire way to grow your asset. If you’ve invested in gold and yet you’re not sure how to handle your investment matters properly, you can always obtain advice from financial experts who are knowledgeable about managing gold investments in the current economy.