Why Every Investor Should Own Gold
from Sprout Money Stocks, oil, and the dollar had a rough week last week, but gold started the year very strong. Both gold as well as the popular SPDR Gold Shares ETF started 2015 on the right foot and companies like Newmont Mining, one of the bigger miners out there and one of the best performing stocks from the S&P 500 in 2015 already, have picked up the slack. Gold is shining, in summary, but will it be able to keep the momentum going? The fact that gold is doing well is due to renewed worries around Europe for the most part, analysts say. There is a huge question mark around the Greek elections and what will happen if the Syriza party wins, which might induce the departure of Greece from the eurozone. Political Unrest Gold has always performed well historically in times of political unrest. Last time when concerns arose around Greece and Europe (in 2011), the gold price surged to a record level of 1,900 dollar per ounce (not corrected for inflation). Since then gold has not been doing so well; even including the recent comeback it is only listed about 60% down from its all-time high. Last year the precious metal had a comparable revival when investors got worried about the emerging markets. The GLD ETF increased by 10 percent in the first 2 months of 2014 only to close off the year with a loss of 4%; the second losing year in a row. If you only focused on gold in the last few years as an investor, you will probably not very happy. Jason Pride from asset management company Glenmede does not feel that now is the right time to buy gold as well. He believes that the fair value for the precious metal lies between 1,000 dollars and 1,2oo dollars and sees no reason that makes gold more attractive now. It is a fact gold has been up because of Greece, but that does not mean it will stay there. A Bit Of Your Own Gold On the other hand you could also state that the crisis in Greece is probably more serious than it was in 2011. A departure from the eurozone has been long discussed, but no one actually knows what will happen when Greece actually leaves the euro behind. Next to that it is expected that the ECB will start up a new expansive policy, which could weaken the euro. Although gold is used as a hedge against inflation, experts say that gold can also do well in an environment where investors are worried about falling prices on the market, especially when the concern is about currencies. The nice thing about gold is that its price is a matter of supply and demand as well. The supply of gold is something that is easily determined, but the amount of dollars, euros, and yens is decided by central banks and they can always print extra money of course. The mountain of money that has been printed across the world already is a seed for inflation, which can take years. Although people are not too worried because of that, it is exactly the reason why we believe that investors should always be invested in gold with a part of their portfolio. Owning a bit of gold is just logical.