The selling frenzy and price pressure triggered by the Federal Reserve is a true gift horse for the savvier gold investor because it creates the ideal buying conditions for those ready to add to their portfolio. This is especially good news right now because it’s increasingly apparent that inflation is beginning to run away with itself – an early sign that a crisis is looming. In times of economic turmoil and challenge, gold outperforms all other assets as a safe, steady and trusted store of wealth.
Investment specialist Adam Trexler says the current signals are a perfect storm for gold, making the present buying opportunity all the more fortuitous for those who can read the market. He said, “The best time to buy gold is before a crisis. This is now a really good time for people to be stocking up, as it were. Because in the event of widespread inflation, we think the gold price will go up much more. There will be more and more spending, and there will be strong pressure to ignore inflationary concerns to achieve those targets. The Fed will be very slow to react, which is a recipe for higher and higher inflation.
“When you start to see that rate of inflation, it will be very damaging for people on a fixed income. It will make savings very problematic. What you will have is a fundamental loss of wealth for people’s savings. You’ll also tend to see a lag between inflation and people’s salaries. That could lead to a decline in real wealth. It’s also a potential ingredient for greater social upheaval.”
“Gold has been used all over the world as a hedge against the national economy you’re in and against currency risks. It’s used in India and China for those purposes. It is used in South America for those purposes. People tend to flee to it in times of economic stress. We saw that in the financial crisis, we saw that during last year’s COVID crisis. It tends to outperform and even be countercyclical for these kinds of situations.”
With all of this in mind, it’s likely that gold will surpass its previous historic pricing levels, with many calling for the precious metal to remain bullish throughout 2021. Don’t be deceived by the current pull back, use it as an opportunity to invest while you can. Trexler adds, “In real dollar terms, with inflation coming, we’ll see gold over £1,798 ($2,500). But we’ll see a devaluing of the dollar. That devaluing is very difficult to predict. But if you see 10% inflation, the dollar number value of gold could be much higher. I don’t think £2,158 ($3,000) gold is impossible. But if we see a hyperinflation scenario, it could be significantly higher.”