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Gold has long been considered a wise investment when pursued in limited increments. And in the economic landscape of recent years, many have also viewed it as a mandatory one. With factors like inflation, elevated interest rates and market volatility particularly pronounced, investors have turned to the shiny metal for the portfolio protection that stocks and other assets cannot offer. That, in turn, has caused the price of the metal to surge, breaking past the $5,000 mark in January after hovering under $3,000 per ounce just one year ago.
And after a report released last week showed a rise in the unemployment rate and a loss of jobs, and with another inflation reading set for release this week, many may be wondering about the timeliness of a prospective gold investment now. That said, gold doesn’t operate in the traditional ways other assets do, and it comes with bigger risks and rewards because of that difference.
To better understand the value of the metal and, specifically, the benefit of investing right now, it helps to take a step back and contemplate the answers to some specific questions. Below, we’ll detail three gold investing questions worth asking this March.
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3 gold investing questions to ask this March
While the decision to invest in gold this month remains highly personal, it can be better defined (and success is more likely) if investors begin by considering the answers to these three specific questions:
What protections does my portfolio currently have?
Gold is considered a smart hedge against inflation and a portfolio diversification tool thanks to its historic ability to maintain value and even rise in price when other assets underperform during times of market volatility. This is why so many have gotten started with gold in recent years. But where does your portfolio sit this month? What protections do you currently have installed to offset the next inevitable round of inflation and market volatility?
After all, with the latest unemployment report showing a rise and inflation still above the Federal Reserve’s target 2% goal, it can’t hurt to have a buffer built into your portfolio. So, if you don’t have any portfolio protections (or not enough), it could be smart to get started with gold. Just keep it a critical but limited portion (often capped at 10%) to allow your other, income-producing assets to still perform as intended.
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Will the price drop low enough to justify waiting?
The price of gold is constantly evolving, changing multiple times throughout the day. And the price can and will come off record highs, often on the same day. So it can understandably be enticing to wait for the price to fall to buy in at a more affordable point. But that’s a risk generally worth avoiding, especially this month when multiple items can impact the price.
Gold’s price drops are not typically as severe as silver’s, for example. And that’s a good thing for investors, as it allows them to enjoy more security and predictability. Waiting to act, then, could even mean getting priced out of the market entirely as today’s gold price may not hold much longer. With ways to get invested without having to pay today’s $5,200 per ounce price, too, from dollar-cost averaging to fractional gold types, you can get started right now and build your gold holdings up over time.
What type is best to invest in right now?
Gold investing is ubiquitous, perhaps more so than at any time in recent history. With it being available for purchase online, via gold investment companies, local jewelers and pawnshops, and big box retailers like Costco and Walmart, now is an especially easy time to get invested in the yellow metal.
The type of gold you actually invest in right now, however, varies significantly. Physical gold bars and coins differ from gold IRAs, which differ from gold ETFs, gold futures and stocks, and each comes with unique pros and cons. In other words, it’s not as simple as simply deciding to invest in gold. The type you invest in right now is equally as important, as that could easily be the difference between investing success and rapidly losing your money.
The bottom line
The above list of questions is not exhaustive, but it does mark a valid starting point for investors considering gold this March. By honestly and realistically contemplating these answers and by speaking with a financial advisor or gold investing company representative, investors can tailor their gold approach to one that meets their needs and goals both this month and in the months that follow. Consider getting started sooner rather than later, however, as the price here could soon become fully out of reach, no matter which strategies you ultimately decide on.