When is the right time to buy gold?

Chances are likely that you have seen or heard about the recent bounds gold has made in the market. Traditionally, gold moves inversely to the US Dollar. Gold has long been referred to as the crisis commodity, but when is it safe to buy gold?

Some of us have questioned the actual value of gold while some industry experts, analysts and investors prefer to avoid the yellow metal all together.

In a recent article on Investors Daily Edge, Ted Peroulakis suggested that “you should own some gold in your portfolio as an insurance policy.” That doesn’t quite answer the question on when it is safe to buy gold. Also, what is the best way to purchase gold? How much should we invest in? Should one consider stocks, bullion, EFT or coins?

Gold prices have risen in the past year because of the weakening value of the U.S. dollar. Conventionally, gold has always moved in the opposite direction of the dollar. As the dollar weakens, gold prices rise and vice versa. The dollar is usually considered the world’s reserve currency. When we see the dollar begin to fail, consumers and investors begin to panic. Not just for their investments but for their jobs, houses and way of life.

Gold has often been referred to as a safe haven investment because it backed by real value. While gold should definitely represent a portion of your total portfolio, when is the best and safest time to buy gold bullion? Some would say it is during times of economic crisis, hardship or financial downturns, very much like the one we are experience now.

The future of gold in the current state of the economy
The current state of the economy is hands down in emergency mode. U.S. consumers just are not buying as much as they have been. It is predicted that consumers will not change until they feel comfortable spending their hard-earned money again. There is a tricky formula to making consumers feel comfortable again and involves recovery of lost jobs and a significant increase in disposable income.

One could say that smart investors love recessions. A good recession gives investors an opportunity to buy cheap and later sell their stocks for double, maybe even triple, what they paid. There are no stocks out there these days that are at the same price they were at a couple years ago. A recession is an opportunity for many to buy stocks, bonds, real estate or commodities at rock bottom prices. They are able to expand their portfolio at the time of purchase and then see a return of their investment when the economy does eventually turn around.

Having said this, gold is often bought during times when the financial outlook may not look so good. One should be careful when buying gold at this time because it is often not as safe an investment. Gold prices during these times are usually higher than they would be when the economy is stable. If you are considering buying any type of gold you should seek the advice of a professional or an expert dealer.