If you’re a gold buyer in Houston or anywhere else, you may be thinking you’ve missed your chance. But I could sell you some Apple stock at $300/share and you’d probably take that deal in hindsight. (Apple touched $700/share today)
Gold is the same type of opportunity. Fear in the market is going to continue to increase the perception of gold as a good investment. In addition, quantitative easing as a monetary policy is going to continue to appear to increase the price of gold. These are great times for gold buyers. Perhaps it’s not too late after all.
Traditionally, gold buyers have begun to come out of the woodwork when economic conditions are less than ideal. If you’re watching the market and trading volumes are down, inflation is beginning to appear and productivity and a host of other indicators are unfavorable, that’s often a signal for gold buyers to step into the market. This additional demand, which usually occurs when people start to realize that things aren’t going well, usually pushes up the price more than normal, which attracts more gold buyers.
As the spiral continues, more and more buyers create more and more demand – which drives prices up and fuels even more demand. And the cycle feeds on itself.
But why? Why do people buy gold when things are bad. The basic reason is fairly sophisticated from an investment standpoint. People are gold buyers when they are trying to PROTECT their wealth. They recognize that they probably won’t be making big gains on their money in a weak economy, so they hunker down and invest in gold to preserve their wealth as opposed to growing it. They forsake growth in order to preserve capital. This investment technique presupposes that you’ve already got a fairly large amount of money to begin with. You’re not trying to make money buying gold, you’re trying to keep it from eroding with inflation.
But interestingly, the mere fact that so many people are doing it leads to gold jumping in price and the early, more sophisticated investors benefit from the arrival of later investors who’ve watched the prices and are late arrivals to the game. The early investors get a double bonus: protection from inflation and an increase in the price of gold as more people come to the party, increasing the value of their original investment.
If you’re one of the early investors and you’ve been a gold buyer for several years, congratulations. If you’re late to the game, don’t sweat it. You’ll get your chance. We’re not getting out of this economic mess anytime soon. There’s still lots of opportunity for you to become a gold buyer in Houston, preserve your wealth and watch people fall in line behind you. Good Luck!!
Houston Gold Merchants is a gold buyer in Houston.
