Why Millennials Should Buy Gold
If you’re a millennial, you should think about buying gold.
It’s all about the long-term value.
World Gold Council chief market strategist John Reade said in a recent interview gold has tremendous upside potential for years to come. As a a result of its attractive evaluation, gold should be of particular interest to young millennials just starting to build their portfolios.
Millennials are an interesting case study; they are going to be working and investing a long time so you need to think about more than just the short term. Gold is a great diversifier for a portfolio, but it is more than that. It is a source of returns that is commiserate with equities over the last 10, 20 years.”
Reade said rising interest rates may put gold under pressure in the short-term. (Peter Schiff recently made the case that rising interest rates are not bad for gold.) Nevertheless, Reade doesn’t think the world’s economic environment will allow central bankers to sustain a high interest rate environment, particularly due to the massive amounts of global debt.
If we are in an environment where long-term real interest rates are going up, then that will put gold under pressure. But if we are in an environment where global economies, facing a massive wall of debt, are unable to tolerate higher interest rates, then I suspect that interest rates won’t be going up for very long and that, I suspect, will be good for gold.”
Reade said red-hot equities markets are the main factor holding gold back currently, but he doesn’t see this as an issue further along the investment horizon.
When I look at long-term valuations of the S&P 500, I think it is probably not the greatest place to be putting money into for the long term because at these sort of levels, your expected returns are going to be low over the next 10 years. Similarly, I see the same thing when I look at bond markets and yields.”
So, if you’re a millennial investing for your future, you should definitely include gold in your planning. It’s never too early to begin buying gold. Consider a member of gen-x who bought gold in 1990. The price was around $390 per ounce. Today, that ounce of gold is worth around $1,260. That’s one heck of a return.
Of course, even if you’re not a millennial, it’s not too late to buy gold. The same factors that make it an important part of a millennial’s investment strategy apply equally across demographic boundaries.
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