Should you buy gold before the July Fed meeting? Here's what experts say
Gold has broken numerous price records this this year. Earlier this month, gold hit another high of $2,472.46 an ounce, and the price of gold changes every day. Even though it continues to hit new records, there are still some good reasons to buy gold, especially before the pending Federal Reserve meeting at the end of July.
Many people are now turning to gold because it brings instant diversification and stability to their portfolios. Ryan P. Derda, a Vice President at American Independence Gold, says some people think they have diversified portfolios when, in reality, they have many of the same asset classes, which are usually all securities.
"Physical gold has no counterparty risk," Derda says, noting that the precious metal has often outperformed the S&P 500.
With the next Fed meeting just days away, it helps to know if you should buy the precious metal now instead of waiting. We asked some experts for their suggestions.
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Should you buy gold before the July Fed meeting?
Most experts predict an interest rate cut soon, if not at the July Fed meeting, and the stock market tends to react accordingly during uncertain times.
"On average, the stock market experiences a 23% decline in value when the Fed cuts rates," Derda says. "Fed interest rate cuts historically precede [a] recession. I always say, 'You don't buy gold to get rich, you buy gold to stay rich.'"
Ben Nadelstein, Head of Content at Monetary Metals, says high-yield accounts aren't as attractive to savers and investors when interest rates go down.
"If the Fed lowers rates and pushes policy back towards zero, that means yields paid in gold will seem more attractive compared to yields paid in dollars paid through a high-yield savings account or bank CD," he says.
And even though the price of gold is climbing, many experts believe it's a top investment.
"Gold has been money for thousands of years and continues to retain its monetary premium," Nadelstein says. "As debt levels have skyrocketed, financial uncertainty grows, and inflation continues to hurt traditional investments, many investors are looking to own gold as a safe haven asset that can also produce passive income denominated in ounces, hedging currency and market risk."
Derda agrees, saying gold is a must-have for investment portfolios.
"In my opinion, everyone should own gold in their portfolio," he says. "Gold is money and a hedge against inflation. Gold is the most liquid asset in the world. It's literally the only asset you can take anywhere on the planet and liquidate it for the local currency."
Learn more about the benefits of investing in gold here.
Even though gold continues to break price records, experts say there isn't a wrong time to invest in it.
"Gold is a Tier 1 asset, meaning it is the safest, most stable asset you can own in your portfolio," Derda says. "Whether you buy gold at a high, or you buy it during a low, it is a stable asset that has always increased in value over time and has been a store of wealth for over 5000 years."
Nadelstein believes its stability over thousands of years makes it an attractive investment, too. "Many investors are looking to own gold as a safe haven asset that can produce passive income denominated in ounces, hedging currency and market risk," he says.
While the uncertainty of the stock market shifts when the Fed adjusts interest rates, gold can be a more stable investment.
The bottom line
If you're unsure if gold is worth investing in, many agree now is the time, especially with the looming Fed meeting. When looking for a place to buy, find trustworthy sellers.
"Buy from a reputable dealer," Derda says. "Many [unethical] dealers charge excessive premiums over the spot price. Purity is another factor when purchasing physical gold, and buying from a reputable dealer will ensure you're buying investment grade metal."
It's also essential to figure out where to store your gold.
"Gold is a physical commodity that's difficult to store," Nadelstein says. "This led to ETFs, which store the gold for you but charge fees, professional vault storage, which also charge fees, or keeping precious metals at home, which can put investors at risk of robbery or loss."
There are a few different ways to store and manage your gold, but it comes down to personal preference, security and what you can afford.
"Many gold investors like to have their gold at home, [but] I recommend using private vault storage solutions," Derda says. "I prefer knowing my gold is behind vault doors, laser beams, seismic detectors, armed guards and last but not least, insured."
