Reading the Gold Prices with an Investor�s Eye

Information is usually the key to successful investing. This applies to any vehicle used to generate wealth, including stocks, commodities, and futures, among many others. When a seasoned investor is considering a purchase of precious metals, they usually make a point of obtaining the most accurate silver and gold prices available. They don’t limit their research to the current price per ounce, however, because this doesn’t give them the proverbial “big picture”.

Instead, they will want such things as gold prices from the previous three months in order to see if there is any identifiable trend in the activity. Interestingly enough, where gold prices are concerned, timing is going to be the key. Just consider the data around gold pricing throughout the year 2009. The price showed a distinct pattern of upward movement, but was interspersed with a few periods of somewhat wild fluctuation. This means that the savvier buyers would have seen the “peaks and valleys” in the data and been able to accurately gauge if gold was about to climb or decrease in price.

Of course, investors also consider gold prices against current market conditions as well. For example, in light of the past few years of global financial turmoil, there has been a huge amount of interest in hard assets like precious metals. In fact, many of the world’s leading financial experts are recommending that investors convert roughly 1/4 of their portfolio holdings into these assets in order to diversify, stabilize, and protect their wealth.

This trend is easy to see in the pricing of gold. How is that? Well, we all know that the biggest financial problems began to appear in late 2005 and early 2006. At that time, gold was roughly $450 per ounce. By late 2007 and into 2008, however, gold had leapt to around $1,000 per ounce. Though it has dropped below that amount since that time, it has steadily risen to average around the $1,200 mark per ounce. This illustrates that investors are using gold to offset the loss and risk of other investment practices that were once more reliable ways to grow wealth.

Understanding the messages connected to the price of gold can really help the investor to make the right decisions at the right time. Even if gold is not purchased for the lowest pricing possible, however, its overall historic behavior is to simply increase in value over time. This means it will always be a savvy choice for the long term.