Should You Buy Precious Metals in this Economy?

Gold and silver, among many other precious metals in the market have experienced several swings, from high to low for the past couple of months. Given the rather unstable nature of the economy nowadays, you may just be wondering whether you should buy precious metals in this economy?  The answer to this will eventually depend upon a full understanding about the risks and the uncertainty that accompanies almost any type of human endeavor on earth which includes investing and trading these commodities.

If you are interested in precious metals as a long-term investment, you probably know that these materials usually come at a high cost.  The extraction and mining process are all very expensive and given the fact that more and more of their raw sources are getting fewer by the year, you can expect most of them to rise in value as time goes on.  But, you may say, gold and silver had just gone through some significant lows during the past few months, so how can you expect them to perform well in the future?

There are indeed some times when supply may become more available than as expected and this can cause a drop in the price of these metals.  Some of these instances are triggered by selling used gold back in the market or “recycling” them.  Although these events can rather be discouraging for a new investor, this should not be so as these circumstances are rather the “exceptions” to the rule.  They can occur at any time but they usually do not become a general trend of what precious metals investing are like.

These “lows” often occur for a short-term period only compared with the overall performance of precious metals for centuries.  You cannot compare these short-lived setbacks to what can be gained within 10 or 20 years.  Yes, you may be prevented from buying or selling these precious metals for a time due to their low prices in the market, but if you look ahead of you after 10 or more years, you will see just how much you can really profit from having these assets currently.  As most investing gurus have stated, gold will not provide you with huge profits in the short-term.  If you are trying to invest in gold, you should look into keeping them for at least 10 years before selling them in the market in order to realize the full profit potential of these assets.

In addition to this there is believed to be a considerable amount of market manipulation going on with national currency which has an effect on precious metals in today’s market. For instance, the United States is continuing its policy of quantitative easing, or money printing. Basically this process of QE is a reckless monetary policy used by central banks to try and help stimulate the nation’s economy.  For the U.S. Treasury it translates in to creating more dollars to purchase paper (bills, bonds, & notes) as well as mortgage backed securities. As currencies are devalued, investors tend to want to gravitate toward hard assets to help protect their wealth.

The economy may not have had such a favorable rate of return in the last few months. However,if you can only look at how precious metals have played in the long history of human trade, you will see that it is only a short setback.  If we are going to base how these metals have done through various wars, economic collapse, political turmoil, and now the prospect of widespread money printing., you will give them a lot of credit for coming out strong in the end.  So the question as to whether you should buy precious metals in this economy would be a definite yes.

[The information found on this website is for general information purposes only. Pleas do your own due diligence before investing. All risk associated with your investing, including any loss is your responsibility.] photo attribution: epsos