It’s been a week of ups and downs for gold prices, only to end near where we started the week. In overnight trading the dollar sagged against other currencies, spurring gains in gold, silver, copper and crude oil.
Gold was trading up $4.17 yesterday morning to $1,665.57 and silver was up $0.32 to $32.50, dropping the silver/gold ratio to 51.2.
Recent movements in gold prices are a concern to some of you, but please let me remind you that gold is on track to increase 6 percent this quarter after reaching highs in the $1,790 price range before retreating to a more realistic level. How did your 401(k) plan do last quarter? I’m not really feeling any inclination to apologize.
All the same these ever-upward prices for gold and silver are going to end and the long uptrend we’ve experienced is going to turn into a long-term down movement. The gold bull run we’ve been experiencing since 2000 has to come to a close someday.
Someday that adjustment will happen, but not today and not anytime soon. Even when the long-term correction happens, you’re not going to mind a bit, even though you’ll be in the red on some of the gold in your safe.
One of the great things about investing in gold and silver is that prices retreat during times of economic prosperity and fiscal responsibility. So, when gold and silver are not performing well everything else in the economy is looking better.
That makes gold and silver some of the cheapest insurance you can buy. It’s insurance against sovereign debt and irresponsible monetary policy. Whether the economy zooms or everything collapses, the gold and silver you have in your safe will still hold some relative value. It may not be as much as you paid for it but something, and definitely more than an equivalent amount of paper money.
During quarters where you make 6 percent on your gold and silver is when I’m obligated by conscience and duty to remind you that you’re not buying precious metals as a speculative investment. Hedge funds are speculating; you are not. You are buying and holding physical gold and silver in coins and bullion-priced products, and you’re doing that precisely because you’re using gold and silver to preserve wealth, not grow it.
We’ve been living in a gold bubble for over a decade now and it’s easy to get complacent. Stay focused on the fundamentals and diversify your investments.