Is late 2021 a good time to get involved in buying and selling gold? Whether your preference is gold backed securities or the bullion itself, there are multiple chances to earn profits as the year comes to a close, and as the global economy continues to underperform. Generally, precious metals enthusiasts, particularly those who like the yellow metal, look forward to volatile and ailing economies. Why? Because when investors get spooked by stock market price swings, inflation, and other significantly bad signs of economic illness, they often purchase gold backed assets and bullion to pump up stock heavy portfolios.
The year has been an interesting one for precious metal investors, as post-COVID price volatility has settled down somewhat. In January 2021, the yellow metal was hovering well above the $1,900 mark, then dipped to an annual low below $1,700 in March. Since then, prices have ranged between $1,900 and $1,740, and are currently trolling the psychologically important $1,800 line as October comes to an end. What’s to look forward to in the fourth quarter and the first few months of 2022? Here’s a summary of what all precious metal investors, traders, and speculators should consider.
Short-Term Opportunities Are Everywhere
In most cases, the most effective way to capitalize on short-term fluctuations in the per-ounce value of gold is with CFDs (contracts for difference). There are two reasons that investors and traders prefer using these vehicles to earn profits in unstable times. The first is that you only need to predict the correct direction of prices, up or down. So, even in falling markets, or short-term scenarios where values change quickly, it’s possible to come out on top is you call the move correctly. Many platforms, including brokers for gold trading in UK, the U.S., Asia, and elsewhere, allow for easy setup of accounts and quick entry into CFD trading.
Second, people who use CFDs as their main way of taking part in the precious metals market need not own the asset. Instead, they own a contract. That means there’s no downside of getting stuck with bullion or gold backed shares that are declining in value. By not taking on the obligation to become an asset owner, you sidestep the negative aspects of ownership but still get to take part in the profits and losses of a particular transaction.
New Mines are Opening
It’s not as if the supply of the yellow precious metals is finite. Some companies and national governments are opening new mines and expanding existing ones every year. For instance, Turkey’s nationally owned gold mining operations recently came upon a major new find. It’s a new mine that promises to yield about seven tons of gold annually. That would boost the nation’s total output from the current 42 tons to about 49.
The Pandemic is Still Here
Don’t bank on the current marketplace volatility to evaporate anytime soon. One of the main reasons it could stick around is that the COVID pandemic has not yet ended. As many nations continue to keep mask mandates, encourage the population to get vaccinated, and retain business shutdown rules, it’s apparent that 2022 will feel the effects of the pandemic. If business closures continue to be the norm in developed national economies, there’s a good chance that inflation, supply problems, and unemployment will remain part of the mix for at least another year.
A Weak Global Economy Means Precious Metals Perform Well
Take a look at any of the major financial and monetary indicators today. Whether you put your faith in major market indices, inflation rates, unemployment statistics, housing data, or something else, the outcome looks grim. Since early 2021, in fact, the global marketplace has been ailing in numerous ways.
Today’s supply chain crisis, coupled with rising inflation, are just two of the standout features of the worldwide fiscal slowdown. For precious metal traders, that means good times, generally rising prices, and the chance to earn profits on both short-term and long-term changes. With each pullback on the precious metals chart, for example, it’s possible to use CFDs to speculate on the size of the potential rebound. Likewise, contracts for difference make it possible to earn even when you think the per-ounce value is set to fall.
Even Long-Term Investors Can Make Gains
People with long-range horizons should spend time examining 15-year and 20-year gold price charts. If that data is not enough to convince you that the metal’s value generally rises over time, then nothing else will. In fact, 20 years ago this week, the per-ounce price was near $275, about 15 percent of its current level. Even the 15-year line is encouraging, showing a $600 per ounce value for the end of 2006.