Investment pundits are quick to analyze the reasons behind the drop in the price of gold and other precious metals prices over the last couple of weeks. Many say the price run-up we had seen was a bubble that had to burst. Some say there will be further major falls before the price of gold stabilizes and works its’ way back to the lofty levels we saw only a few short weeks ago. Others, patting themselves on the back, have been saying for the better part of a decade that gold prices would sharply decline…and finally their predictions came true, if only for a little while. Why the sell-off in gold? Even the most astute experts are grasping for sound rationale.
Yes, gold prices have retreated, but it is important to put things in perspective. Until recently, gold had been a spectacular performer. In the short, three-month period from early July to the beginning of September, 2011, for example, the price of gold was up over $400/ounce, reaching a high of over $1920/ounce! Rallies of that magnitude are seldom sustainable without some sort of correction taking place. Also, keep in mind that forty years ago gold sold for $40/ounce. Ten years ago gold reached a high of $291/ounce. Based on the current price of gold of approximately $1620/ounce, gold has increased approximately 17% from the beginning of this year, over 23% in the last 12 months, and a 167% increase over the last 5 years. These are healthy gains!
So, the question is, will gold prices continue to drop or will they continue their upward trend? If past is prologue, the latter is certainly the case. Simply put, gold is a rare, precious asset that people around the world have used as a store of wealth for more than 5,000 years. Like all commodities, gold is a volatile investment and there are no assurances that there will not be corrections to the price of gold over time. Few, however, argue that the overall trend for gold is upwards. Our recommendation, for those wishing to invest in gold, is to consider placing 5-10% of your investment dollars into gold. You can purchase gold EFT’s, gold mutual funds, gold mining stocks, or take possession of the actual metal itself. At Diamond Buyers we sell all gold bullion coins and stamped, certified gold bullion bars. All it takes is a simple phone call to our toll free number, 855 753-4653 (GOLD), and we will be happy to explain to you your “golden” opportunities.
411 N. Leadville Ave.
Ketchum, ID 83340