Gold and the Economy

Gold can be one of the best gauges for the health of the economy that investors look to as a tool.  This is because of gold’s fantastic precedence as being a hedge against an uncertain economic climate.  When bad jobs reports come out, investors move to gold.  If the stock market takes a negative turn, precious metals will sometimes move inversely proportional as a result of investors moving funds into the safe-haven investment.  When a weaker economic outlook negatively affects the U.S. Dollar, gold will begin to rise, and vice versa.

There are many examples in recent history that shows the investor demand move to gold and other precious metals, following big world news.

In June 2016, gold prices rose $100 an ounce in just six hours.  This was due to the shocking Brexit vote, which led investors to panic.  Prices rose from $1,254.96 at 4 pm on June 23, the evening of the Brexit vote, to $1,347.12 by midnight.  That's because investors bought gold as a hedge against declining currencies (the Pound and the Euro).

On September 5, 2011, gold reached its record of $1,895 an ounce.   Many variables contributed to this, including weak jobs reports, the lingering eurozone debt crisis, and continued uncertainty around the U.S. debt ceiling crisis.  In 2009, the price of gold rose to $1,000, and less than 2 years later it nearly doubled.

And of course, one of the most important days in gold price history waswhen President Nixon detached the U.S. Dollar from the Gold Standard in 1971.  Gold prices skyrocketed from $42 to $120 an ounce.

Economic conditions can always be used as a tool to determine when to buy precious metals.  In our Safety Step: Protect Your Future course, we teach that keeping a close eye on the market conditions is very important, so that you can avoid the fear-induced urgency to purchase precious metals when a weaker economy increases demand for the safe-haven asset.

The economy is just one more way to utilize precious metals investing, and using it as a means of wealth preservation for your family’s inheritance.  It has been done for centuries, and continues to be a powerful way to protect your future to this day!