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Investing in gold? 3 smart moves to make now

Given the current economic environment, now may be a good time to invest in gold. Getty Images/iStockphoto

It's been a turbulent year for an economy going through high inflation, a rocky stock market and now economists' warnings of a potential recession in 2023. Amid such uncertainty, investors may be looking for alternative methods to protect their assets and, hopefully, make money. 

One asset you might consider in times of economic turmoil is gold. This metal is often seen as a safe haven against inflation which may perform well in recessionary eras. 

If you think you could benefit from investing in gold then start by requesting a free wealth protection kit online now. 

3 smart gold investment moves to make now

With the potential benefits of gold in mind, let's examine three smart gold investment moves to make right now.

1. Invest a small portion to diversify your portfolio

Adding a small amount of gold may help to diversify your portfolio and hedge against inflation. That's because when the value of the dollar drops, investors often turn to gold and other "safe haven" vehicles.

According to the World Gold Council, commodities like gold can outperform some traditional financial assets like stocks when the inflation rate outpaces the interest rate. That's a scenario we've seen play out recently, as the Consumer Price Index inflation rate for November showed prices for goods and services were 7.7% higher over the previous year. 

And although the Federal Reserve has maintained an aggressive rate hike schedule in 2022, it still falls well below the rate of inflation. As of December 1, the federal funds rate sits at 3.83%, significantly higher than the 0% to 0.25% levels we saw last year but still less than half the current inflation rate.

Given these variables, it may be an opportune time to add some sparkle to your portfolio to safeguard against inflation and perhaps even earn a profit.

Explore your gold investment options with Goldco now.

2. Invest ahead of a potential recession

It may be advantageous to invest in gold if the economy falls into a recession in 2023, as many experts predict. That's because, historically, gold has performed well during some recessions.

According to a analysis of Macrotrends data, the price of gold experienced increases ranging from 0.1% to 87% during six of the last recessionary periods dating back to 1973. During the pandemic in 2020, the price of gold climbed 5.6% and briefly reached an all-time high of $2,000 per ounce.

Another reason gold may be a good investment option during a recession is because of its low-to-negative correlation with the stock market. That means when the price of stocks falls, the price of gold tends to rise and vice-versa. Accordingly, if the market declines in the near future, you may see the gold value rise again.

3. Invest ahead of potential price increase

A GoldSilver analysis of daily gold prices from 1975 through 2021 found that the most advantageous times to purchase gold are early January, March, and early April, and from mid-June to early July. If the trend bears out again, now may be a good time to invest in gold before prices rise.

Ultimately, no matter when you buy gold, supply and demand will determine its price. The more demand there is, the higher the price will rise, and the opposite is also true. With the potential for a recession in 2023, and favorable historical pricing trends in the early part of the year, you might consider adding a little shine to your holdings.

The bottom line

While gold can perform well in poor economic times, it can also be volatile in the short term. Accordingly, many financial advisors recommend limiting your investment in gold to a small percentage of your investment portfolio. As with any investment, weigh the pros and cons of gold investment before making a decision.

The experts at Goldco can help you get started today.

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