For several years, proponents of gold investment were trumpeting its advances. From 2001 until 2011, gold made nearly uninterrupted advances from its low of $270 to more than $1,900 per ounce. This precious metal seemed like the only gainer many times when the economy as a whole was down.
Then, in 2011, things changed for gold investment. The price suddenly began to slip. At first, there was little concern. Gold had reached several plateaus and even back-tracked on its way up to $1,900. Confident investors were certain that prices of $2,000 per ounce were just around the corner.
Then gold prices fell down as far as $1,500 per ounce. The price held there for a long time, well into 2013. Occasionally, it bounced back up and enthused buyers.
However, in April, things took another return for the worse and gold values dropped below the $1,300 mark. Many people began to openly proclaim the end of the gold rush and declared that the bubble had finally popped. Investors who had bought in when gold seemed to be racing for the $2,000 per ounce mark were, understandably, completely disillusioned.
The question for potential gold investors now is naturally about the wisdom of gold investment. They want to know if the bubble has finished popping. If not, then you can expect to see gold prices continue to drop. In that case, most investors are obviously going to stay away from gold. If the decline is over, however, then there may be plenty of good reason to get back into gold for another ride to the top.
The evidence may be on the side of gold investment. Prices remain much lower than the 2011 highs. However, they have nearly returned to $1,400 per ounce. That is a significant gain over 5 months for anyone who bought into gold at its lows in the $1,200 range.
Just considering recent performance, though, is a short-sighted way of considering the issue. There is much more to gold than just a pretty, shiny metal. It is not just a good hedge against inflation, either.
The fact is that gold is subject to growing demand that is overlooked by many investors and noninvestors alike. This precious metal is found in a wide variety of mobile devices, laptops, computers and so on. It is a vital component in many electronic devices. Since gold does not really corrode and it conducts electricity well, it has become useful in these devices. The most important connections are often formed from pure gold.
Since these devices are becoming so widespread, you can well imagine that there is an underlying support for gold prices that goes beyond hedging against inflation. Like other commodities, gold is in demand. However, gold is not renewable like many other commodities, such as wheat or rice. It is available in a very finite quantity. That can only spell future gains for this precious metal.
Buying gold has always made sense in the past and will continue to make sense in the future. Do not let your portfolio continue without at least a small portion of it invested in gold.