The best time to buy gold or buy silver has yet to occur. But the best time to buy could be in the not too distant future. Investors buy gold and other precious metals in times of high economic uncertainty. Keep your eye on the following three catalysts that could send prices soaring. If none come to pass, it’s not the best time to buy gold or silver – yet.
Precious metals prices are not exactly cheap with the yellow metal at $1100 an ounce and the white stuff at about $17. They’ve come a long way in the past decade… from less than $300 and just a few bucks, respectively. In early 2010 there was no compelling reason to buy gold or buy silver. But things could change, and it wouldn’t be pretty. Let’s talk about INFLATION, THE DOLLAR, and the U.S. NATIONAL DEBT. We have many more Precious Metals Investing Articles Now Available.
Inflation has been tame for years, but this could change if the government cash printed (borrowed) to fight the financial crisis and recession inflates prices. Many economists fear rising prices. Too much money chasing too few goods and services equals inflation. In the past, a prime best time to buy gold & silver: when inflation soars. Keep your eyes open, it could happen.
The U.S. dollar has gained ground recently against other major currencies, and is still the world’s currency of choice. If the world loses confidence in the buck, the dollar could fall out of bed. A plunging dollar definitely suggests the best time to buy gold. Why? Gold is quoted and traded in dollars. The lower the value of a dollar, the more of them it takes to buy a troy ounce of gold. Silver prices normally follow in lockstep.
And then there’s the national debt of more than $12 trillion, climbing at the rate of over a trillion a year in budget deficits. The $12 trillion figure is the advertised number, and does not include the unfunded debt obligations estimated by some authoritative sources to be in the neighborhood of $50 trillion. What happens if and when the rest of the world loses confidence in the financial strength of the U.S. government and economy?
Japan and China and the rest of the world own a lot of the debt we’ve floated to stay afloat and pay our bills. These debts take the form of U.S. government securities called Treasury bills, notes, and bonds. These securities are heavily traded on the open market. If you own them, you can sell them at will. Massive sell orders could devastate the value of these securities, our credibility, and economy. This would not only be the best time to buy gold, it would create an economic panic.
How could the U.S. service its massive debt when no one was any longer willing to lend them their money? Talk about a high level of fear and uncertainty… in today’s world this would be the ultimate. An American buying precious metals would not be an act of greed. Rather, an act of survival. Let’s hope this best time to buy gold never occurs. The good news, if you want to call it that, is that several countries in Europe are even more debt ridden than America is.
Like I said before, precious metals are not necessary cheap at present prices. Should some combination of the three above scenarios evolve, it could be a whole different story. In the meantime, you might want to consider precious metals for 5% or so of your total investment portfolio. When real bad news hits, prices move quickly. We have many more Precious Metals Investing Articles Now Available.