Geopolitical Tensions Make Gold A ‘Buy’ - RichardACox/financialmarkets GitHub Wiki
Geopolitical Tensions Make Gold A ‘Buy’
By Richard Cox
The financial markets have seen their share of turmoil over the last few weeks as geopolitical tensions in Syria and North Korea have generated declines in world stock markets. There are several reasons for why this has occurred, as many investors are looking to avoid risky financial positions while the global outlook seems to be growing increasingly unstable. Luckily, there are traditional market strategies that can be used in these types of situations, as assets like gold and silver have a long history tend to become much more popular when financial conditions begin to deteriorate.
To some investors, the recent moves in the market might come as something of a surprise. Stock markets rallied strongly to start the year, propelled by the election of President Donald Trump and the broader optimism seen in the strengthening labor markets. But we all know that no asset rally can last forever and investors have already started to take profits with equities valuations trading near record levels. Investments do not exist in a vacuum, however, and we are already seeing a significant portion of the market moving into precious metals as a result.
Gold and Silver Investments
The modern investment environment has started to evolve in ways that benefit precious metals investors in innovative ways. The internet has opened up new avenues to buy and sell gold coins using accurate price feeds from reputable precious metals dealers. These types of outlets will allow you to make sure you are getting the best price for your gold on the open market.
In the chart below, we can see that gold prices have shown massive rallies in the early parts of 2017. Already this year, we have seen gold assets show returns of nearly 12.5% that have outperformed many sectors in the market. This type of activity is highly encouraging, given the fact that fund investors the S&P 500 have posted average annual returns of only 10% when we are looking at the historical activity from 1928-2014. Add to this the protective nature of precious metals investments and we have a scenario for success for those looking to capture gains using gold and silver assets.
Gold Price Chart: Atlanta Gold & Coin Buyers
Another factor to consider is the extensive price history of gold-related assets. Gold has been a profitable investment for thousands of years and when we look at the excessive national debt that has been accumulated in many of the world’s largest economies, the protective nature of commodities prices and safe-haven assets looks much more attractive.
In the current geopolitical context, there is no clear end the potential for military escalation in many parts of the world. This is not a scenario that is positive for stocks but it is highly bullish for gold and precious metals investments. We have already started to see strong rallies in these areas, so investors should look for new ways to capitalize on these trends before they fully develop.