For the past couple of months gold has been in consolidation mode. This is because the world’s economies have not performed well and there are no other ways to go but with gold. Now the Federal Reserve has implemented its emergency rate cut plan.
Central banks have become more vulnerable to economic upheavals due to their overextended balance sheets. Since the world has little financial assets left and most central banks need to spend the surplus on interest, borrowing costs and quantitative easing gold prices will start to consolidate again as central banks need to print money to meet their monetary targets.
The gold prices could drop considerably as the demand for gold remains high. It seems that people are buying more bullion and less paper as the global economy slows down. However, the use of gold as a hedge against inflation remains high, especially in Asia.
Central banks need to realize that there is a war brewing on the streets of the West and that their actions have huge implications for the global economy. The Federal Reserve will spend its time walking around in circles until something changes. By that time, they will already be tapped out.
Since so many central banks now intend to take advantage of low gold prices, then it’s a perfect time to strengthen your reserves. There are some suggestions below that you should consider carefully.
The only effective protection against inflation is to protect your wealth with gold. Many people are waiting for the next big crash so they can buy gold to safeguard their wealth. Now is the time to diversify your holdings.
Hold one multi-currency pair of investment. At least ten percent of your portfolio should be in gold. Then move your money to gold ETFs. You will soon be able to protect yourself from rising prices and hard currency devaluations.
Sell bonds and stocks if you can. In general, the yield you pay on a bond or stock is much higher than the cost of buying gold. You will get much less risk in buying gold.
Do not worry too much about gold markets. The reason why people keep investing in the market is that it keeps going up and down. Sooner or later, it should stabilize and this will go a long way to supporting your investments.
Unless you have a lot of money in the market, you’re never going to be able to buy a lot of gold. Don’t forget that the price is under pressure and it’s only going to go lower. Take advantage of gold being worth less today than it was a year ago or a year before that.
Another reason why people invest in gold is because it’s hard currency when you need to do a quick trade. One way to do this is by selling and buying into gold ETFs. Even if you don’t have a lot of gold, it doesn’t hurt to think about selling and buying into this currency over the long term.
All in all, there is very little reason to worry about the gold price. The Fed’s policy will eventually unwind, you know, once they realize that they can’t get the level of inflation they want. And this will go on until there will be no prices at allin gold.