Are Gold and Silver investing still good value?

silver investing

Gold & Silver Investing

Is the time right for gold and silver investing? It’s true that, at first glance, when looking at the historical price charts for gold and silver, they can look like a bit of a rollercoaster. This might lead you to believe that gold will never reach the dizzying heights it once did.

As the graph below illustrates, the price of gold over the last five years reached its highest point in 2012, when it soared to a record high of £1,200 per ounce.

1st chart

The picture for silver investing is similarly positive –

2nd chart

You can view more graphs, illustrating past performance over various timescales, by clicking here , They make fascinating reading, though we would always stress that they should be considered in context and not in isolation.

Recent bull run

2016 has seen both the gold and silver prices soar by around 30% in a matter of months. And although it might not yet have reached the heights of 2012, gold enjoyed a continuous upwards trend, hitting a top point of £1,050 per ounce in July.

In Q1, The World Gold Council reported gold demand was up 21% to 1289.8 tonnes – the second strongest quarter on record. Firt half gold demand was up 18% – the second strongest on record – with gold investment accounting for almost half of that demand. This is the first time this has ever happened. And as we write, the price today hovers around the £1,000/oz mark.

Silver also went from strength to strength, reaching its highest price recently since January 2015. The US Federal Reserve’s decision not to change interest rates, together with no indication as to when they might raise them, encouraged people towards investing in gold and silver.

Current opportunity and potential

If this makes you feel that you’ve missed the boat, don’t be despondent. Prices are still around 20% below their historical peak, so it’s still a very good time to invest in both gold and silver. In fact, it just goes to underline that it’s a lucrative opportunity, with room for growth and the possibility of sharp spikes.

Crucially, the influential factors which tend to increase the demand for precious metals, are still very much in place. Global markets continue to be unstable, rumours of another banking crisis persist and a housing market slowdown is being touted. Combine this with heightened terror threats and rising demand from Central Banks for gold, and it’s easy to understand why the precious metals market still has plenty of wind in its sails.

Long term view for gold and silver investing

The value of gold and silver may be volatile, but owning them as part of a portfolio actually reduces your overall personal volatility. They tend to act as a balance to the traditional paper assets (like stocks and shares), so when those markets fall, physical gold and silver have historically risen. The motivation for many gold & silver investors isn’t necessarily to time the market perfectly; instead, it’s to take a long term view to provide balance and protection to their overall wealth. This way, exact timing isn’t important, as the long-term hold should outperform any short-term price drops and still deliver portfolio insurance.

So there’s no need to worry that gold prices might appear to plateau from time to time. Both gold and silver most definitely remain very worthwhile, solid, tangible investments.

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Cost average to iron out volatility

If you’re still unsure and concerned about timing, then our ‘Monthly Saver’ enables you to purchase on a regular basis. You can set up to automatically buy a small quantity of gold or silver every month. This means that if the price does decrease from one month to the next, it actually benefits you, as your next purchase would be at the lower rate.

Over time, you buy each month at the various underlying prices, therefore averaging out the cost of your precious metals. It’s a great way to get started in gold and silver investing.

The main message is that it’s necessary to take the long-term view. As with any investment, prices will go up and down, but as these graphs illustrate, the rewards can be well worth it. If you’d like to find out more about this type of investment, why not Download our free guide to investing in gold and silver. We maintain gold and silver are still very good value and worth their weight in, well… gold and silver!

Daniel Fisher

Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.

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