With the sky-rocketing price of gold today, the budding question on everyone’s mind is whether or not it will hold its value in the future. Sitting at over $1,500 an ounce, the price of gold is bursting through old ceilings as investors desperately seek a more solid product in which to rest their ailing stocks. Each day that passes breeds more people interested in buying gold & selling gold.
As the U.S. dollar continues to take a nosedive, gold has taken center stage in the portfolios of conscious investors. Creating a modern-day gold rush, this precious metal sits on a bubble that has many skeptics looking concerned. Much like the housing peak of 2007, investors fear that the rise in the price of gold and silver is the result of careless speculation. Others believe that it is a result of economic troubles that have caused a transition from more risky stocks to a more stable gold solution.
Over the past few years, gold prices have continued to increase. To make an assessment on the stability of gold, one must look at the overall factors that affect the price of gold.
- Gold has significant commercial use. This means that even in a recession, commercial demand stays strong and may even increase the price of precious metals.
- Foreign demand helps stabilize the price of gold as commercial consumption overseas from Indonesia, China, and India remains strong even in a crumbling U.S. economy.
- Often used as a hedge against inflation, gold is commonly added to portfolios as a protection investment. This cautionary surge has aided the value of gold in economic times of late.
- The decline of the U.S. dollar has helped gold to become the preferred method of payment in recent times.
- Central banks also affect the value of gold as they grow their gold reserves. Large gold purchases by central banks often lead to a surge in gold prices.
The value of gold in commercial trade will most likely help to keep its value steady over time. The question as to whether cautious stock holders will again begin to trade out of gold’s stability and into more aggressive stocks is yet to be seen. As well, if the value of the U.S. dollar recovers, gold could lose some of its stronghold.
Like most commodities, gold is driven by age-old supply and demand. Speculation also plays a part as investors hedge their bets for the future and decide whether to jump on the gold boat or wait for the next best thing.
Financial stress is a major player in the current demand of gold. Like all precious metals, gold is a defensive stock, holding its own in times of uncertainty. But even gold is not completely immune to economical stressors. If congress decided to turn over a new leaf and pay down its debt, if the US dollar made a rebound in value, or if gold or commodities tipped heavy on the scale, the value of gold could begin to decrease. But the chances of these factors coming true tomorrow—or any time in the near future—are quite minimal.
Even with the uncertainty of speculation in the price of today’s gold, it is still a stable stock; hence why it is used as a stabilizer in times of economic turmoil. Because of this, gold is also not a stock that should be bought and sold on a dime. Long-term goals must be kept in mind, as investing for the future is an important part of evaluating your assets. Gold is a great long-term investment and one of the most stable stocks in which to place your long-term savings.
That being said, if you have gold to unload in the way of jewelry and household items, now might just encompass the best circumstances under which to sell it. Although gold is a stable and fairly predictable stock, history shows that bubbles do sometimes burst, even on a smaller scale. What goes up often must come down, so if you’re holding onto a handful of gold that could help you lift a financial burden today and help you improve your tomorrow, selling your assets at the probable peak of the next American gold rush is a great way to reap the most out of liquidating your precious metal assets.