Gold and Silver Investment for the Long Term

In the current sluggish gold and silver market, it is important to consider the type of investing you’re doing because investment is all about timing. Gold is down 1.9 percent on the week, which is substantive for the commodity. After two significant corrections this past fall and winter, the gold market is both strong and sluggish and investors need to see those fundamental dynamics to invest appropriately.

Demand for gold is down across the globe right now. There are several reasons for this, but possibly most prominent are central bank policy and decisions overseas as well as the relatively optimistic economic data in the US.

India is the world’s largest gold market and it needs to be recognized for its buying power. Traditionally, Indian social systems have stored wealth in the form of jewelry, which is transferred through generations and especially upon marriage. This is a significant market for gold, but the central bank in India has been churning out policy concerning the Rupee, the Indian currency, and this has taken some of the wind out of India’s demand as a buyer of gold. We feel that effect in gold and silver investment here in the United States.

Additionally, there has been relatively optimistic economic data in the United States that many investors have illogically latched onto and used as a basis for risky investments. We would all appreciate the economy getting a little better and for actual expansion to again resume, but the mediocre data that came out was not a definite sign of that, just an indicator that it may be possible.

Investors pulled a lot of money from gold due to this dynamic and a great deal of demand dropped. This is the primary cause of the current doldrums in the gold market as we’re experiencing them. Three months is a long time for a lag in the pace and excitement of the past years. We’ve seen all-time record prices in gold and silver as well as record pace for the movement of gold and silver over the past two years. We’re not used to such a drop in demand or a malaise.

This is why gold and silver are long term investments and should always be regarded as such, particularly when demand is low.

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