Fear and uncertainty have long been driving factors for people to purchase gold. You’ve probably heard the argument before: purchase gold to protect yourself from possible future inflation, and so on. Investors sometime think of gold as a safe haven against some type of stock market crash sometime down the road.
But according to some recent articles, the notion of investing in gold out of fear or uncertainty is no longer valid. Many experts are arguing that the option to protect yourself with gold as a hedge against inflation is a long way away, and in the short term, interest rates are rising making the investment less attractive.
These same experts are also theorizing that the low price of gold could go even lower. Here are a few additional reasons why they are making this claim: equities are outperforming gold investments, for example, gun manufacturers have recently had better performance than gold.
Economic uncertainty is also subsiding. While in general this is good news, the lack of uncertainty is not good for the sector of people who rely on gold investments driven by fear and uncertainty. Said another way, if less people are scared or uncertain about the country or world’s economic future, than less people will invest in stock gold to protect themselves against a possible economic meltdown.
However, people who invest in stock gold out of fear or uncertainty are actually investing in the wrong way. Investing in paper gold to protect yourself against a stock market crash is like putting ice in your water because it’s too cold. The real way to invest in gold to protect yourself from a stock market crash or other economic disaster is to invest in physical gold (and silver). Physical precious metals are separate from the stock market and can truly protect you in a myriad of situations. For example, in an economic collapse stock gold will lose value while the physical metal will go through the roof due to decoupling. No one will want paper gold and there will not be enough physical metal to satiate demand.
Stock gold’s “fear factor” may be on the decline, but physical gold is becoming more popular than ever, as investors and countries around the world continue to buy as much physical gold as possible. Demand is high and prices are generally low due to the poor spot gold performance, so the time is right to invest in physical gold.