2022 has seen a resurgence in precious metal prices. CNBC has tracked a 6% rise so far this year for gold, with silver following a similar trend. These prices are popping, given the relative cost of precious metals through time, and it’s starting to give investors a headache about whether or not to start investing. Looking at gold, the most classic store of monetary value, is a good place to start.
Gold’s fluctuations
Ever since the US dollar was decoupled from gold, it has been an interesting commodity to watch in terms of global events. The rise of cryptocurrencies typically sees gold deflate, as Bloomberg notes, but gold has been surprisingly resilient so far this year. Part of the reason may be due to geopolitics. With conflicts raging across the world, with Ukraine seeing fighting on a particular scale, many investors see it as a good time to buy gold in order to counteract global forces. When volatility is around, the stocks and shares markets become weakened, making classic reserves of value a better option.
The current situation
There are a few reasons why precious metals are gaining such incredible value at the current time. The Economic Times of India highlights the conflict in Ukraine, equity market outflows and global inflation as a reason for swapping from stocks and shares to gold. However, they also note that divesting from shares out of fear, and putting it all into gold, is not necessarily the best strategy.
Gold over time
The true value of precious metal investing comes from time. Gold has only ever increased over time. A few large dips were experienced, for example in the early 1980s, but gold data collated since 1971 indicates an investment that only goes up and up. Gold and precious metals are a fantastic way to store your money in a timeless asset, and will behave as such. Accordingly, it’s not the best place to rush into investments due to panic – instead, think of it as a reserve.
Investing in precious metals might be wise right now – if you want to see an immediate appreciation in your portfolio. It’s unlikely that they will lose that value. However, it’s also unlikely that they’ll continue to experience huge gains as they did before, either. Gold will level out, and other shares may present better opportunities for ‘quick wins’.