Gold is one of the best gauges for determining the health of the current economy or other market cycles.
When people begin to see that the economy may not be doing well, you’ll see the price of gold start climbing because that is a ‘safe haven asset’ that people use to protect their money. When the health of the economy starts getting better and the outlook for the future starts improving, gold goes down because it is not a way to make money, it’s a way to protect money. People start moving those funds out of gold and putting them back in the stock market and other equities.
Let’s take a look at some specific examples:
One of the most important days in gold price history was when President Nixon detached the US dollar from the Gold Standard, 1971. Gold prices skyrocketed from $42 to $122 an ounce very quickly.
In 2009, the price of gold rose to $1,000. Less than two years later, it doubled.
On September 6, 2011, gold reached its record of $1,921 an ounce. Many variables contributed to this, including weak jobs reports, the lingering Eurozone debt crisis, and continued uncertainty around the US debt ceiling crisis. This led to the peak price of gold, $1,921.
In 2016, gold prices rose $100 an ounce in just six hours. This was due to the shocking Brexit vote, which led investors to panic. Prices rose from $1,254.96 at 4:00pm on June 23rd, which was the evening of the Brexit vote, to $1,347.12 by midnight. That’s because investors bought gold as a hedge against declining currencies such as the pound and the euro.
Market conditions play a huge role in determining when it’s a good time to buy gold or sell gold. We teach that in Safety Step: Protect Your Future, our online course about precious metals investing.You can learn how to use the market conditions in your favor. That is one of the most important factors when it comes to investing in gold and silver.
