Gold is one of the oldest investment types known to man, and for good reason: they’re not making any more of it. When the last gold mine has been searched and mined, there won’t be any more of the precious metal to buy, sell and save. Accordingly, the scarcity of gold has made it a reliable investment for hundreds of years, and that’s unlikely to stop anytime soon.
That said, like any other investment type, there are better times to invest in gold than others. While gold can be helpful in most economies — and for most investors — there are some good times to get started and others when you may want to consider putting your money elsewhere. To get the most out of a gold investment, however, it helps to understand both ends of the spectrum.
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2 times you should invest in gold
Here are two of:
During times of inflation or economic uncertainty
If you’ve seen gold in the news or on television more lately it’s easy to understand why. Gold is often viewed as. And since inflation has been higher than it’s been in years, more investors have turned to the yellow metal to protect their larger portfolio.
Overall, during times of inflation or economic uncertainty, gold can be worth investing in. In fact, this may be the very best time to invest in gold. Look to NASDAQ data for confirmation. The 1970s, for example, started with an average interest rate of around 6% but concluded with a rate closer to 14%. While that was bad news for the larger economy gold prices during that same decade rose from $35 to $850 per share.
While gold can help during tough times, just make sure to do it correctly. Specifically, most experts advise limiting the gold portion of your portfolio to.
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When you’re in it for the long haul
There are some investments in which you can make money quickly. Gold isn’t one of those investments. Instead, to get the most from gold you’ll want to stick with it for the long haul. The longer you keep gold the more value you’ll get – though that value won’t come overnight.
“10 ounces of gold bought 23 years ago in 2000 would have cost around $2,800,” Mel Mattison, CFP, financial services professional and consultant, recently told. “Now, a child born then would have almost $20,000, perhaps just enough for a down payment on a starter home.”
That’s not to say that you might not benefit from some short-term gains over a few months or a few years with gold (you might). Just that you’re better off as ato really reap gold’s rewards.
2 times you shouldn’t invest in gold
Here are two times you should consider alternative investments:
When you’re looking to make money quickly
As mentioned above, gold is better as a way to make money long-term (think years) than some other investments. On the other hand, if you’re looking to make money quickly, consider skipping gold and putting your money in stocks and bonds, instead. Gold, after all, is considered a, or a way to protect what you’ve already earned — not to exponentially increase it overnight. If you invest in gold with that desired result, you may wind up losing money.
When you’re planning on retiring soon
. But if you’re planning on retiring in the foreseeable future, you may be better off keeping your money liquid, or putting it into something where you can more reliably earn quick returns. As mentioned above, gold serves chiefly as a protection and secondly as a long-term way to grow your money. If you don’t need the protection and can’t wait for the growth to produce any tangible results ahead of retiring, consider skipping the precious metal for something else.
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The bottom line
With so many investments to choose from and varying timelines to accomplish one’s goals, gold isn’t for everyone. If you do decide to invest, however, there are some better times to get started than others. It can be a significant source of financial protection for your portfolio during times of inflation and economic uncertainty. And gold can help see your money grow long-term if you want a safe and steady growth path. However, like all investments, there are some other times you may want to strongly consider other options. Specifically, you probably shouldn’t invest in gold when you’re looking to make money quickly or when you’re planning on retiring soon and will need to have more liquid investments readily available.