Why did gold reach an all time historic high this past week, and is it still a good time to buy gold? Gold traded as high as $2,095 an ounce, passing the previous all time record of $2,089 that was set on August 7th, 2020. So what caused the rise in gold prices? This is the question that the Wall Street Journal's MarketWatch asked me this week, and here's what I said.
The current rally started after the release of the October Consumer Price Index on November 14th. The government report showed that prices were unchanged. Investors took that as a strong signal that government policies have mostly tamed inflation and that the Federal Reserve is probably finished raising interest rates. It may even start lowering rates sooner and faster than most investors previously thought.
So how does that impact gold prices? Well, gold is priced in U.S. dollars all over the world. Lower interest rates mean lower yields for Treasury bonds. And since Treasury bonds are bought with U.S. dollars, falling demand for Treasury bonds means falling demand for the U.S. dollar. A cheaper dollar means that it costs more U.S. dollars to buy the same ounce of gold, and that is the impact that lower rates have on gold prices.
So as long as the value of the dollar keeps falling in comparison to all other currencies from different countries, gold prices will likely keep going up. Of course, interest rates aren't the only factor that impacts gold prices. Geopolitical risk, economic uncertainty all impact prices, but interest rates do have a big impact.
So with gold at an all time high, have you missed out on the opportunity to add gold to your portfolio? Well, it all depends what your investment goals are. If your goal is to make short term trading profit on gold, then you may have missed the latest big rally. Now there's some data out there that suggest that the rally isn't over. But if your goal is to protect your retirement, then it is almost always a good time to consider diversifying your retirement portfolio with gold.
Gold's performance over the long term is very good. It's hard to find a ten year period where gold lost some of its value, and that's why it's also considered a store of value. There are stocks and bonds that end up being worth nothing, like Lehman Brothers stock or Argentinian bonds, but gold has always been worth something over the last 5000 years.
One of the easiest ways to diversify your retirement investments with gold is through a precious metal IRA. Those IRAs hold real gold and silver that you actually own. This balances your retirement with an asset that will always be worth something in the future, and it also acts as an insurance policy when stocks or the value of the dollar go down. My precious metal IRA is from U.S. Money Reserve.
If you're interested in exploring this option to protect your retirement investments from the potential of an uncertain future, call 1-866-646-8465 and ask to speak to a U.S. Money Reserve IRA specialist.
