Is Gold Still Viable as a Long Term Investment?

January 15, 2018
1809 Views

Gold has long been seen as one of the very best precious metals for investment, thanks to its ability to hold value throughout changing economic conditions. It is limited in supply and high in demand, and is used in a diverse set of industries ranging from microprocessor manufacturing, to automotive and aerospace manufacturing. A strong equity market can sometimes send the price of it into a dip, but this is not what we’re seeing in 2018.

Gold hit a high in the second week of January, and investor interest has been picking up.

Can Current High Values Be Maintained?

The U.S. Dollar is definitely playing its part in the current strength of gold. Even as the Federal Reserve announced slight increases to interest rates, it continued to perform well. If the dollar weakens further, then it could even go up again.

At the beginning of the third week of 2018, gold is trading at over $1,333 per troy ounce on most leading exchanges. Investors now will be feeling quite confident in any holdings that they currently have. It is, however, important to remember that every investment is volatile by nature, and there is no exception to the rule. Although it doesn’t fluctuate as much as property, currency, or stocks, it still has dips and highs throughout a trading year. There are even some analysts who are predicting that gold could fall to prices as low as $1,200 by mid-2018.

James Hughes, a respected market analyst from AxiTrader, is not confident that it will be able to maintain high prices throughout the whole year. As reported by City AM he said that “a correction towards the $1,300 level if not lower could be on the cards later in the year.”

Goldman Sachs analysts were even less positive in their outlook, predicting that it could fall to $1,225 within the first quarter, and could hit as low as $1,200 by mid-year before recovering slightly by the end of the year.

Is Gold a Good Investment?

People planning for retirement who want to diversify their investments are often drawn towards it. There will always be a demand for gold and that means it will always have value. The question is whether it will always have a high enough value that provides a return on the initial investment. Its market has had periods where value stagnated for years at a time, with no major shifts up or down.

It should be seen as an option but not as a primary investment. The precious metal is not immune to inflation but it can become incredibly valuable during a period of high crisis. As a smaller investment within a large and robust portfolio, gold can provide long term security, but investors should not expect to make significant gains in the short term.

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