The Gold Rush Too Early Or Too Late To Buy?

Just the other day a client of mine said to me “Steve, what’s the deal with all of the Gold ads that I’ve been seeing lately?

I know, it’s as if everyone is urging us to sell our jewelry or invest in gold or gold coins.

I know from experience that it’s a sign. It’s a big fat market signal. But I’ll get into that in a minute.

Investors tend to flock to gold when there is instability in the global stock or currency markets. The reason for this is gold is viewed as a safe haven or a hedge for stocks or currencies. Therefore, if you’re using gold in your portfolio to hedge against any downside risk then that could be a good decision. However, if you’re interested in taking your money for retirement and buying gold in expectation of earning crazy high rates of return, then you may want to think twice about taking this risk.

History proves that during U.S. economic recessions gold tends to trade relatively high relative to its historic average. The question now becomes, since we’re not in a recession why is gold still trading so high? Well here may be a few answers…

The constant uptrend in price for the past two years has been partly a result of the dramatic increase in demand for the precious metal from developing countries, mostly China and India.

For example, India’s consumer demand for gold (jewelry, bars, and coins) is a whopping 1,035 tons, China demands a second of 714 tons, Europe is third with 306, the U.S. and the Middle East fall in last at nearly 239