Is it a good time to buy or sell gold? When the economy is in a recession and stock prices decline, gold buyers have traditionally bought up gold ounces in hordes. Gold is considered a traditional store of value since its value is not significantly affected by interest rates, like that of currencies or stocks. Because gold is considered recession-proof, it is a safe haven investment.
Global recessions and gold prices
As a safe-haven investment, the price of the yellow metal typically rises during a recession. During the last global recession in 2008, the price of gold started climbing and hit all all-time high of $1,896.50 per ounce in 2011, a 225 percent increase over three years. The global coronavirus pandemic is no exception. Gold buyers are out in full force. A global recession was officially declared in mid-March. One month later, the gold price had increased 20 percent to $1,731.70 an ounce.
So should you sell your gold, or wait?
Timing is everything, as the old axiom goes. Should you sell your gold or wait in the expectation that gold prices will move higher? Investors are also asking if they should sell silver or buy silver. Silver is the other safe-haven precious metal, and as such its price tends to move in tandem with the price of gold.
Forecasting gold prices with the Gold/Silver Ratio
The gold/silver ratio can provide a price signal and help you decide whether to buy or sell your silver or gold. This ratio tells you how many ounces of silver you will need to buy an ounce of gold. In March, the ratio hit a 5-year high of 124, but since the global recession was officially announced a few days later, the ratio has slid to the 110 range (the price of gold is about $1,600 an ounce and silver $15). In other words, you will need 110 ounces of silver to buy an ounce of gold. The declining ratio indicates gold is becoming cheaper to buy.
Both gold and silver prices are volatile and can quickly experience large price moves. Whether or not the price of gold and silver continues to move higher, as defensive investments, investing in gold and silver is one way to diversify your portfolio. Both precious metals have a negative correlation with (meaning their prices move in the opposite direction of) stocks, bonds and the US dollar.
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Share23 April 2020
Adoption is a beautiful thing. Raising a child someone else had is a completely unselfish act of love. Do you want to adopt a newborn in the near future but are afraid you won’t have the necessary funds to do so? Consider meeting with an experienced financial adviser. This professional can sit down with you and recommend viable fundraising options. For instance, you might want to take out a loan. Or you may wish to sign up for a grant. Obtaining a tax credit is also an alternative. On this blog, I hope you will discover effective tips to help you raise money for an upcoming adoption.