Investing in Gold During Economic Downturns

Investing in Gold During Economic Downturns


It’s always a hard topic to discuss, and it’s one that we always hope doesn’t happen; but unfortunately it always will at some point. A bear market and an economic recession that could be caused by any number of things. This year, it was the COVID-19 pandemic that caused it, and before that the housing market crash in 2008. When these events put your money at risk, buying physical gold may be the best way to protect it. Here’s a few reasons why investing in gold during a recession can be a good idea.

The Stock Market Takes A Hit

When investing starts getting shaky like they did in 2008 or 2020, there’s often a lot of investor panic, and the stock market often takes big hits. Now if you are holding stocks and you see a market drop, it may be best to hold onto them and let the market recover. But some companies don’t survive downturns, and therefore their stocks could go under. Gold, on the other hand, is independent of the markets, and it’s value can be retained or even go up when the stock market goes down. The stock market is where investors connect to buy and sell investments — For additional information about the commodity or stock prices visit Finscreener.

Paper Money Printing

There is also a practice that’s been going on for a while at the Federal Reserve and other central banks known as quantitative easing. This is printing money, or creating it digitally to try and keep it flowing in the economy often in hopes of stimulating it. In some cases it correlates with government action such as the recent CARES Act, or stimulus bill as it was called. Unfortunately printing too much money leads to either inflation or deflation, and the end result can hurt your cash savings. Gold is a valuable precious metal that cannot be printed or created out of thin air, and therefore is often untouched by inflation. As the experts at Goldco put it, “Because annual increases in the gold supply are minuscule when compared to the total supply of above-ground gold, there is no major inflation of the gold supply.” That’s why physical gold is good to add to your portfolio.

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Gold Is An Option For Your IRA

You may have heard of investing in gold by buying shares of a gold ETF, but you can actually invest in real physical gold through an IRA. What you need to do first is open a self-directed IRA, and then find a reputable gold dealer to buy from. Your gold backed IRA can be directly funded through your bank account, or by rolling over a 401k into it. But all gold purchases must be completed through the IRA, and an approved third party organization must transport it to a depository to hold until you reach the appropriate withdrawal age. In the meantime, your gold can gain in value while being stored.

At the end of the day, investing in gold is an asset that will never hit zero value, and it’s even more stable than other precious metals like silver. You just need to make sure you know how much to buy, and that you buy from the right wholesaler.

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