All over the world, government debts are rising, due to the global pandemic. Money is being borrowed to pump up the economy, causing many investors to worry that the stock market is artificially high, and therefore unstable.
When events like this happen, investors start to become reactionary and buy more gold. They do so because they believe – rightly – that gold maintains its value in uncertain economic times.
What ends up happening, though, is that most investors only pay attention to the metal when it’s being covered by the news. Of course, when it is being covered by the news, it means big fluctuations are occurring.
That is why many today are asking this question with more frequency: Is it the right time to invest in gold? The answer is, there is no “right time,” because gold is an ongoing trading metal.
“It’s best not to go into panic mode when buying gold. Do not do things in a reactionary way,” cautions Express Gold Refining’s manager Atef Salama.
“My advice to the client is to buy it and average out your purchases over time. This is always the best strategy that I find. You don’t go all in at one time, and then all out at one time. It’s got to be a continuous purchasing or selling of the product.”
Fortunately, gold prices even out over the long term. It’s not like cryptocurrency, where it’s soared a thousand times, and then tomorrow it might go down drastically. Often gold does well when stocks don’t, and vice versa.
When the US Dollar loses value, gold value rises, and this also makes it more attractive when the currency’s value is erratic. Gold is considered relatively inflation and deflation-proof, keeping and even increasing in value in times of economic inflation and deflation. This is because, unlike fiat currency, gold is a finite commodity. Gold supply is actually in a decline. The selling of gold by central banks has slowed a lot since 2008 and new avenues of mining are also down. This reduction of supply has the effect of raising gold prices. Add that to the fact that gold demand is high, and that pushes gold’s price and value even higher.
The most secure way to buy is physical gold, says Salama. There are two refiners that produce those bars in Canada: Royal Canadian Mint and Asahi. Because they are Canadian, reliable, and they tend to have the lowest premium because there is no shipping cost or holding costs.
THE “HOW” OF PRICING
Pricing is an important factor to understand, as well, when considering gold purchases.
A lot of people look within a month, 6 months, or a 12-month chart. That’s how Express Gold Refining evaluates the gold, in terms of the purpose of the investment. If you are looking for a long hold, you might want to look at a 1–3-year chart. Then that can give you an indication of whether it’s high or low.
You can use Express Gold Refining’s website, with historical charts that go up to 5 years back. Though again, Salama cautions that long-term fluctuations can add some context, the more recent the information, the better.
“I don’t just look at those values, I look at the movement of it. Then, that could tell me if the price today is high or low. If my price is the highest it’s been in the past 6-months, today is probably not the best time to go all in,” says Salama. “I would take a little bit at this price, because I’ve decided to invest, and then wait out another week. If the price is higher, we know we are on an upside of the market. If the prices go down, say, 5%, maybe it’s time to double what I bought the first time.”
Also, you don’t want to be borrowing to invest in gold, he cautions. That’s not a smart idea, because gold is not going to give interest. So, if there are any interest charges that you are paying to buy gold, that’s money that is being wasted. You aren’t taking advantage of gold as a hedge against inflation, because now you are paying interest on it.
BEWARE CURRENCY LOSS
If you are a Canadian investor in the Canadian market, the monies are converted from the US Dollar, so in Canada, we are exposed to two different risks. We are exposed to the exchange rate, and we are exposed to the price fluctuation of gold. That could add another layer of risk. Be really aware that if you buy gold in Canadian currency, you are exposing yourself to the exchange rate. The other way to do it is to convert your Canadian dollars to US dollars and then you buy your gold in US currency. You can just keep buying and selling in US dollars.
Fortunately, Express Gold Refining is the first seller, or wholesaler, getting the products directly from the refiners, and then they sell directly to the public. Thus, the client is skipping all the other profits that dealers might put in between.
It certainly helps that Express Gold Refining has been in business for nearly thirty years so there’s no hassle selling back the product to a company that has been around a long time.
Gold investment should be part of a diversified portfolio for very many reasons, and the experienced staff at Express Gold Refining can help you in your investment journey!