Shiny yellow metal lately falls slightly out of favor as Europe picks on Greece and manufacturing trends downward in China and the United States.
It is time to panic?
Actually, no. Cheap gold represents a buying opportunity for long-term investors. Were you planning to liquidate in order to purchase a Hawaiian island, you may have to pass on the BOGO jet skis and the reality TV film crew. Your gold isn’t translating into cash as well as it did a few months ago.
Order up your ounces should you be a committed purchaser. It’s a historically low price relative to recent highs. We’ve seen it peak at $1900 within the past year. Relative to where the price could end up should Euro and Dollar-based economies solidify, current gold prices could be a current bargain. On the other hand, prices just might continue to trend downward as bickering continues and people stop making stuff to sell.
Some good news for chart-watchers: 12 months ago the spot price was actually lower. Gold purchased in June of 2011 has increased in value. Of course, your malleable yellow metal purchased at strategic peaks in August of 2011 is worth over $300 less per ounce. It doesn’t pay to obsess, unless you plan to obsess professionally.
Gold marketers (not investors) bank on confused amateur investors to lust after upward trends. Such data will fuel purchasing decisions in the hope that momentum or world financial conditions or herds of investing sheep will continue pushing prices higher, thereby improving positions added yesterday. Such a herd mentality runs counter to ‘buy low and sell high’ advice but it builds commissions for those with gold to churn.
So, if you think gold is cheap, buy some.