A recent item in our weekly Touchpoint series suggested one of the best ways to know it might be time to give serious consideration to physical gold in your portfolio is when you see mainstream financial websites and publications saying it may be a good time to buy.
More attention is being paid by everyone to gold these days in the wake of its solid performance against the stock market’s recent round of volatility. The strong, upward move in the price of the metal as stocks suddenly tanked highlighted gold’s tremendous value during unsettled market conditions.
The “Part B” to gold’s jump is that many investors have been nervously anticipating the next big correction – or even full-blown bear market – expected to hit equities. For them, seeing physical gold’s resilience in the last round is a welcome sign they may not necessarily have to suffer the next time big market trouble arises.
Forbes, recognizing the recent surge in gold interest, is taking the opportunity to remind readers just how well the metal fared during last decade’s global recession and associated stock market collapse. Augusta has referred to this shining period for tangible gold on numerous occasions, so you know how we feel about it. But it is heartening to see a popular financial publication suggest an alternative asset – one not likely considered by its regular readers – may be the key to surviving the next collapse in stocks.
Gold Soared While Stocks Tanked During Great Recession
In its article, Forbes looks at how gold performed from 2006 to 2011, citing a 176% return for gold during those years. The article doesn’t indicate specific dates corresponding with that return. However, we do know if you owned both physical gold and a basket of equities representative of the S&P 500 index at the beginning of 2006, then by the end of April 2011 your gold would have soared almost 200%. As for your stocks, they would have returned less than 10% for that entire five-year-plus period.
Gold vs. S&P 500, 2006 to 2011
(Chart Courtesy of StockCharts.com)
Granted, 2006 was a year before the Great Recession financial crisis began to unfold in earnest. However, it’s not a stretch to suggest astute investors already were preparing for a collapse. Global debt was soaring, and most significantly a rapidly expanding real estate bubble was apparent to anyone who was paying attention. It’s reasonable to imagine those already aware of physical gold’s historical resilience during market upheaval were buying (or buying more) of the metal at that time.
Don’t Forget About Silver’s Stellar Record in Financial Crises
The Forbes article focuses on gold, but it would be a mistake to ignore silver during the last decade’s stock market crisis. Although it took silver a little longer than gold to react favorably to the unpleasant market situation, when it eventually caught fire silver scorched an amazing path to safety and even prosperity for investors who thought to include it in their portfolios.
If we add the price action of silver to the previous chart, we can see that silver’s ride through the first half of the given period was not quite as even as gold’s. But the white metal ultimately rewarded patient investors with a stunning return of nearly 450% during the same stretch gold was notching a none-too-shabby 200% return.
Silver vs. Gold vs. S&P 500, 2006 to 2011
(Chart Courtesy of StockCharts.com)
Is the recent positive coverage of gold in mainstream media your cue to buy it? Perhaps. But it’s really precious metals’ longstanding record of providing effective portfolio diversification to savings and retirement accounts that should be prompting you to retain gold and/or silver as a standing component of your asset base.
To learn more about all the advantages of owning gold and silver (during a financial crisis or anytime), call Augusta Precious Metals at 855-242-4121 and speak with one of our highly qualified gold and silver specialists. Ask, too, about how you can own physical gold and silver inside a self-directed physical precious metals IRA. That’s not an account option financial advisors typically will recommend, largely because it falls outside the realm of negotiable securities such as stock and bonds. Nevertheless, the tremendous potential benefits of owning physical precious metals are too compelling for smart IRA and 401(k) investors to ignore.