In case you didn’t know, billions of cicadas are supposed to be out and about this year and coincidentally so too are gold bugs out touting now is a good time to buy gold! There are also reports that Costco keeps selling out of gold bars in minutes as soon as they go on sale.
Before You Rush To Buy Gold
Before you run to Costco or your online gold broker to buy some gold, let’s take a look at what typically happens with gold before, during and after these cyclical hibernation periods. Below is a chart of gold from 2007 thru 2024.
Gold tends to spike in terms of panics.
2008 Great Financial Crisis
The three large spikes in gold correspond to three crisis. In 2008, we had the great financial crisis where bank failures jumped, a massive credit crunch occurred and commodities, like oil, spiked to all time highs.
2011 European Debt Crisis
As fallout from the 2008 financial crisis spread throughout the world, Europe found itself in a sovereign debt crisis. At the same time, the U.S. received it’s first ever credit downgrade from AAA to AA+ from S&P. There were also Mideast geopolitical tensions that contributed to uncertainty in financial markets.
2020 Pandemic
The last huge spike in gold (before now) was the pandemic in 2020 where massive shutdowns of businesses across the world happened. It could be argued that monetary policy from this time led to the massive inflation we are experiencing now.
2024 ???
So what’s driving gold to the moon now? We have commodities spiking, including oil hovering around $90/barrel as of the time of this post. Inflation for March showed hotter than expected. We have geopolitical tensions in Ukraine/Russia, Palestine/Israel/Iran as of the time of this post.
I don’t now how high gold will go from here but I suspect that gold will come crashing down at some point soon after this crisis(es) are over. It won’t shock me if gold comes down to $1600/oz in 2 or 3 years time frame but don’t take that to the bank because things can also spiral out of control and drive gold even higher. Some forecasters are saying gold will rise to $2700 or $3000 or $5000 over the next few months or years.
Will I Invest?
I actually own some gold already and I am considering selling it and pocking the profit. I bought some gold coins in Dubai and I recall paying around $1300/oz for them. They have been sitting in my safe at home for at least 12 years and I was just planning on leaving them to my kids but I think they’d rather have the cash. I’m not running out to sell them this month, I will hold on and wait to see what happens but if gold hits $2500, I’ll sell then wait till the price drops and buy them back again at a cheaper price.
If you look at the chart of gold, the spike run-ups always end up coming back down and that is what I personally expect to happen, I just don’t know how long that will take.
“Be fearful when others are greedy and be greedy when others are fearful.” – Warren Buffett
Share the Wealth
Do you plan on buying gold? If so where are you going to buy it?