Since you found your way here, I can only assume that you’re thinking about purchasing gold bars. But, you’re not certain if this is the right move to make at this time.
I don’t blame you for wondering about gold at this point. It had a huge run for over a decade, reaching a high of $2,000 per ounce in August of 2020.
Then in March of 2022, it reached an all time high of $2,043 per ounce.
It now seems to be pulling back in price just a little bit.
Many people are curious if this is still a good investment. They wonder if gold is going to continue to drop in value, or will it turn around and continue with its previous incredible gains?
I have some thoughts I’d like to share with you in regards to the topic of buying gold bullion bars. If you’re ready to learn more, then continue to stick with me.
Let’s take a look right now…
How the Stock Market Affects Gold Prices
2022 has seen the stock market go down significantly due to the Federal Reserve’s proposal to raise interest rates in response to soaring inflation. (The S&P 500 was down 3.6% in January while the Nasdaq fell 9.49%.)
Two factors that have contributed to the turbulent stock market are:
- Runaway inflation and interest rate hikes
- Russia’s war in Ukraine
The stock market has continued to drop and unfortunately until the economic data shows that inflation has slowed down, it doesn’t look like there is going to be a change any time soon.
Rising inflation could cause the U.S. to go into a recession and many investors are fearful of this possibility since consumer confidence which is another factor is also low.
During a recession, stocks and bonds tend to go down while gold usually goes up.
There’s one key piece to this puzzle that you may not realize…
… So here it is:
The commodity gold is universally accepted all over the world. While many currencies have failed all throughout history, gold (and other precious metals) has always been the one constant to continue to retain value.
Sure, the value of gold will always fluctuate. That’s what happens to a commodity that’s part of a living market.
Is Gold a Good Investment?
Diversifying your investments with gold bars can help you control risk and help preserve your savings. Investors who have diversified portfolios worry less during turbulent market swings.
The war in Ukraine has many investors purchasing safe-haven assets like gold and precious metals. In fact, the U.S. Mint has reported that sales of gold bullion are up 617% for the year and over 400% for the 5-year average between 2015 and 2019.
Growing inflation, rising interest rates and the war in Ukraine have all played a part in the stock market going down —
while those same factors have caused gold prices to go up.
Just before Russia invaded Ukraine, gold’s spot price was at a high of $1,912 per ounce, up from around $1,800 the beginning of February.
And it kept going…
Gold climbed to its all-time high in March 2022 at $2,043 per ounce; up 13.5% from the beginning of the year.
Then, when the Fed, in March, started hiking up the interest rates and increasing the U.S. dollar, gold prices started to drop in April. High inflation causes the price of gold to go higher.
Between January and April 2022 gold outperformed most of the major stock indexes except for the U.K.’s FTSE 100.
Gold: A Hedge Against Inflation
Having a well-diversified portfolio of assets that includes historically more stable investments like gold bars and other precious metals will help shield you from losses on your more riskier assets.
By purchasing gold bars, you will pay a lower premium than if you bought gold coins. You can buy 1 ounce bars, 10 ounce bars, 1 kilo bars, 400 ounce bars or 50 gram bars.
Make sure that all of the bars you purchase have a hallmark, a serial number, and the weight and fineness stamped into them. This amounts to a certificate of authenticity for each individual bar.
You can buy any other type of gold as well. All forms of this commodity are set to rise in value over the coming weeks, months and years.