Gold is going through a phase where its value is settling down, making it a good time for investors to think about adding more gold to their investments, as well as considering investing in mining companies that dig up gold. Ryan McIntyre, who works at Sprott Inc, talked about this in an interview with Kitco News. He thinks that considering how expensive stocks are right now, it’s a smart move for investors to shift some of their money from the stock market (like the S&P 500) to gold and gold mining companies.
McIntyre also mentioned that he believes investors will keep buying gold even if its price goes down a bit, which will help keep gold prices relatively high.
For the past year, not many investors have been interested in gold because interest rates have been going up, making it seem like there are better ways to invest money than in gold. But McIntyre thinks that comparing gold to bond yields is not the right way to look at things.
The choice that stands out to me isn’t between government bonds and gold; it’s between the S&P 500 (a stock market index) and gold. When we check the Shiller Price to Earnings Ratio, it’s trading at twice its usual rate. That means holding onto stocks might not be the best idea because their prices are very high compared to what they usually are. If you think about it, companies will have to make a lot more profit to justify these high prices.
Even though gold is having a tough time right now because the Federal Reserve (the central bank of the United States) is being cautious with its money policies, I still think it’s a good investment because it can adapt to different economic situations.
If inflation goes up, the Federal Reserve might have to raise interest rates again. That would make it more expensive to hold onto gold, but it would also affect the prices of stocks.
Basically, if interest rates go up, it’s not great news for gold, but it’s even worse for the S&P 500 (a big stock market index). On the other hand, if the economy slows down a lot, the Federal Reserve might have to lower interest rates. This slower economic activity would also bring down stock prices.
When I think about the S&P 500, the best outcome seems just okay, and the worst outcome seems really bad. But when I think about gold, even the worst outcome doesn’t seem as bad.
McIntyre also mentioned that because the government is borrowing more money, U.S. Treasuries (which are government bonds) aren’t as safe as they used to be.
Gold is like the easiest and safest choice when things get tough, but oddly enough, people don’t always like it. That’s actually a good sign, according to McIntyre.
Even though gold prices are kind of settling down right now, it wouldn’t take much for more people to start investing in it again and push prices up to new highs.
McIntyre thinks it’s a good idea for investors not only to have physical gold but also to look into investing in mining companies because right now, their prices are really low compared to what they could be worth.
He’s optimistic about mining because even though gold prices started going up only recently, mining companies haven’t really felt the full benefit yet. Usually, the first part of the year isn’t great for gold production, but that’s changing now.
In the past, mining companies haven’t always been great at managing their money when gold prices are high. But it seems like they’ve learned from their mistakes. McIntyre thinks now is a good time to invest in them because they’re doing well without getting too carried away.
