After a long period of low inflation, it finally looks like inflation in the US and Canada is on the rise. Record low unemployment, higher wages, and rising food and gas costs are all pushing inflation to multi-year highs. That has Wall Street eyeing a gold comeback in the near future.
Rising inflation quickly eats away at interest rates, even resulting in negative real interest rates for traditionally safe, low-yield investments like government bonds. The real risk of investing in bonds is seeing your gains eroded by rising inflation – and that’s when Wall Street turns to gold.
Gold is the oldest hedge against inflation and a standby when returns on the market diminish or things look risky. Gold has performed well against inflation for a hundred years (and probably longer, but there are fewer numbers to go by as you go further back in history).
A look at the movement in gold prices on February 14 provides a lot of insight into what may be in store for gold in the coming year. Despite a rally on the S&P, which ordinarily might prompt a gold sell off as investors moved back to equities, the gold price hit its highest since May 2017. That’s because investors are worried about inflation.
Fed rates have been at near-historic lows for the past decade and despite rising inflation, there’s still a reluctance to raise interest rates too quickly. That could be bad for investors and send many toward precious metals to keep the value of their money until conditions are ripe for a return to stocks and bonds.
When inflation kicks in, gold is one of the safest investments you can make with your money. It’s known as a safe haven for a reason, but you need a bit of foresight to make the most of gold. As inflation creeps up or markets hit the rocks again, the gold price can rapidly increase. If your portfolio already has gold in it or you increased your position at the right time, you can see some big returns from the shift toward safe haven assets. If you’re following the pack, you may be paying to keep your money safe.
If you’re wondering how to invest in gold bars, you have several options. You can go to a local gold shop to buy gold bullion, but you may face higher premiums. You can also buy gold online from gold dealers like Silver Gold Bull. An online gold dealer is more likely to have lower premiums since they save on overhead costs. If you’re new to gold investing, be aware that when you buy gold, there’s a premium over spot price you have to pay. There’s a premium charged by mints to cover the cost of making gold bars and gold coins, then the gold dealer to cover the costs like warehousing and insurance. Shipping is fully insured – it may even be safer to have gold bars or coins shipped than taking them home from a gold shop yourself. Gold dealers like Silver Gold Bull often offer free shipping on large orders, another way you can cut down on costs.
As inflation rises, now is the time to buy gold. Find gold at a low cost and protect your wealth from inflation.