Category Archives: Investment

Gold investment & the economy

The decision of whether or not to invest in gold is always a tricky one, and at this particular point in time there is a great deal of uncertainty in this market that exists largely as a result of its perceived stability. In recent months and years, gold has been considered a strong investment, mainly because its value is considered stable in relation to struggling economies like that of the United States and much of Europe. Therefore, people trust in taking their money to places like to invest in gold as a sort of economic safe haven. However, shifts in the economy are altering the landscape for gold investments, and there are some indications that investing in gold may not be as strategic in the coming months.

gold coins

Again, gold investments are often seen as a safe haven in times of economic hardship or depression, and this is one reason that 2012 was projected as a strong year for gold
investments. Much of the world remains in serious economic trouble, including the United States and many of the larger European economies. So, in recent years, gold has been a popular destination for investments. Indeed, the year started with a very promising month for gold, which saw its price increase 10% over the course of January. However, somewhat unexpected trends have slowed this quick start, and may be reversing the fortunes of gold investors.

While a number of economists have hinted at the possibility of economic recovery over the course of the last year or so, the opening months of 2012 have shown promising signs, particularly for the United States economy. Of course, complete recovery will be a long process rather than a sudden trend, but the signs are there, and the economy and the U.S. dollar have begun a slow but sure strengthening process. Meanwhile, while the first financial quarter still saw a net increase of 6% in the price of gold, the last two months have shown a bit more of a downward trend in gold value.

Of course, there is no ultimate rule that a stronger economy means a weak gold market. However, to some extent, this does tend to be the trend, as gold is used often as a haven for wealth in turbulent economic times. As the U.S. economy begins to recover, and the dollar shows signs of strength, many investors will begin to feel more comfortable again with keeping their wealth in the dollar. So, while there is no sign that people who have invested in gold should necessarily panic and withdraw their investments, it would be a good idea to keep a close eye on the market in the coming months, as continued economic recovery may well work toward decreasing gold’s value.