Gold for the Long Term

After gold delivered its best annual performance in more than a decade last year with a gain of nearly 25 percent, its price has slipped in global financial markets during the early weeks of 2021.  The price movement is nowhere as volatile as that in cryptocurrencies or Nasdaq stocks, but the dip may be giving some investors pause.

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Here are the key takeaways. Number one: no investment climbs in a straight line. It is the nature of any market for prices to rise and decline as buyers and sellers engage in what economists call “price discovery.” Number two: do not buy gold or any other quality investment with the intent of selling within a matter of days or even hours. The smartest approach for any individual investor is to hold gold for the long term, not to attempt to trade in and out of the precious metal. Gold’s value has been affirmed century after century. It is a holding that, over time, brings safety, security, and stability to well-diversified investment portfolios, particularly well-suited for retirement nest eggs. Gold bullion coins and bars are assets that can be held in the knowledge that they will not only retain their value over the years but should incrementally add to that value.

The current price dip is primarily a consequence of a jump in interest rates. Since gold does not pay interest, it is not surprising that there would be a short-term drop in price as some assets shift into bonds. Also, the U.S. dollar has recently move higher along with interest rates. Gold often has an inverse relationship with the value of the dollar.

With the global economy rebounding, however, demand for gold is likely to increase, which should put upward pressure on prices. This means long-term investors can take advantage of current price dips to add to their gold positions.

Get in on Gold

Start your gold collecting journey today with Nationwide Coins.