Our guide to investing in gold and silver right now

Our guide to investing in gold and silver right now

Earlier this week, the price of gold plummeted after reaching record highs, while silver’s price also decreased after topping out at a multi-year high.

This price drop encouraged the team at GBS to create a guide on investing in gold and silver. There is no better time than right now to take advantage of attractive prices for these precious metals.

What caused the price drop and the drive to get people thinking about investing in gold and silver? Kitco's precious metal division head, Peter Hug, said recently that precious metals prices were over-extended after both metals had impressive runs.

“Silver ran up to $30 US. Gold ran up to almost $2,100 US, all a little too quickly in my opinion,” he said. “That's when the profit-taking set in. It was just a very small door with everybody trying to get out. And then as the market moved lower, people who were in at higher prices were getting margin calls in the afternoon, which just accelerated the move.”

Hug said the move resulted in the market “cleaning itself out.”

As we reported in a blog post about how the pandemic has influenced gold prices, what moves the needle on the high prices related to what the pandemic has done to this space: gold bullion is as scarce as it’s ever been in modern history, but the global lockdown months ago only hastened what may have come to pass anyway. It’s been revealed many countries were eager to get hold of as much gold as possible. For the past decade, they have been gobbling up new reserves and bringing it home from overseas storage to an extent never seen in modern times.

You might also want to familiarize yourself with the supply chain details of these metals before seeking to invest in gold and silver.

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How to invest in gold

The global pandemic has challenged governments and central banks worldwide to stave off a recession, as a Kitco analyst writes, which is why we have seen gold, a popular safe haven asset, gain so much value in such a short period of time.

“It is that short period of time that created a very small window for market participants and investors to rebalance their portfolios appropriately,” the report goes on to say.

Now you might wonder how to invest in gold now that you see an opportunity in this moment in time. Investors interested in investing in gold directly have three choices: purchasing the physical asset, buying shares of a mutual or exchange-traded fund (ETF) that replicates the price of gold, or trading futures and options in the commodities market. Some investors, for example, might gobble up some gold coins, while other more experienced investors may implement strategies using options on gold futures.

One avenue to look into is mining stocks. To invest in gold wisely, investors may want to track how stock prices tend to follow the prices of the commodities on which they focus; but because miners are running businesses that can expand over time, investors can benefit from increasing production.

Still, running a business also comes with risks. After all, mines don't always produce as much gold as expected, workers sometimes go on strike, and disasters like a mine collapse or deadly gas leak can curb production and even cost lives.

Buying physical bullion is another way focusing on how to invest in gold. The pros of owning physical gold range from direct exposure to the item being a tangible asset you can hold and store, and both physical gold and silver are simple to liquidate.

Invest in gold today and reap the rewards tomorrow

If you need more evidence that it’s a smart decision to invest in gold right now, look at how gold is in big demand, which it has been for a few years now. This will keep upward pressure on gold, and once inflation ramps up, thanks to all the money that’s being printed these days, it’ll make gold even more appealing.

Also, as a Forbes article outlines, “the U.S. dollar is set to decline a lot further and resume the drop that’s been in force since 1971. As it does, this will also provide more fuel for gold’s bull market. If this bull market unfolds like the previous ones did, the gold price could ultimately soar to the $7,500 or more.”

You might think such a price point is reach, “but it’s happened before, and it could happen again,” the Forbes report goes on to say. “That’s even more so the case considering we’re in uncharted waters and these are unprecedented times. But regardless of where gold ends up, the main point is, gold is the very best investment in today’s environment.”

Today is the right day? Time? to start investing in gold and silver

Gold isn’t the only darling precious metal attracting attention. Silver can provide protection for periods when the dollar declines in value, as it has this year, Seeking Alpha writes. “With the blowout fiscal deficits and unprecedented monetary expansion since the Covid-19 pandemic, many analysts expect further weakness in the dollar in the months and years ahead…Because silver has rallied so strongly in the past few months, it is reasonable to be concerned about whether it has become overvalued. However, as shown in the graph below, silver is still quite a bit below its recent peak in 2011.”

If you’re interested in buying gold, you should note another advantage: It can protect your investments during periods of economic or geopolitical crisis. And depending on the nature of the unforeseen circumstances, gold can move from a defensive tool to an offensive profit machine.

Lastly, you want to turn to a reputable gold seller such as GBS who employ experienced precious-metals specialists and can provide you with accurate information on what options you have if you are seeking to invest in gold and silver today.

If you have questions about gold, silver or other precious-metals inquiries, contact us anytime.

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