By Aly J Yale
Copyright cbsnews
Inflation has sent the costs of many goods and services upward in recent years. It’s also had a hand in a surging gold interest, which has sent the price of the precious metal soaring.Since 2023, gold prices have hit record levels several times. And today, the spot price of gold sits at over $3,600 per ounce, which equates to an increase of about $1,600 compared to just two years ago.With gold prices so high, many investors may be hesitant to invest in the precious metal. Has it hit its peak, after all? And is buying right now too risky? Here’s why experts say you may still want to add some to your portfolio, despite today’s high price tag.Find out more about the many benefits of gold investing.Gold prices are near a record high. Here’s why experts say it’s worth investing in anyway.Experts say there are a few reasons to consider investing in gold in today’s market, despite the high price tag, including the following:Gold still has room to growWith its recent run-up, it’s easy to fall into a “what goes up must come down” mentality, but gold experts say that’s not the case with gold — at least not yet. In fact, most believe gold still has plenty of room to grow. “Gold doesn’t have a hard ceiling,” says Brett Elliott, director of content at the American Precious Metals Exchange (APMEX). “The recent move above $3,600, hitting a new all-time high, gives us some evidence that gold isn’t done yet and the market is expecting more.”And, should a rate cut occur at the September Federal Reserve meeting, which seems highly likely, it only stands to further gold’s growth. Right now, the CME Group’s FedWatch tool puts the chance of a 25-point rate cut at 92%. There’s a small chance of a 50-point cut, too.This expected cut, plus rising inflation, can “act as a powder keg for gold,” Elliott says.”If the Federal Reserve begins seriously cutting interest rates, gold becomes relatively more attractive,” says Ben Nadelstein, head of content at Monetary Metals. “Earning 4% in gold compared to 3% in dollars could encourage more investors to move their capital into gold. “And as gold gets more attractive as an investment, prices tend to rise.”Conditions like exponentially rising debt, persistent inflation risk, and ongoing currency debasement all point toward climbing gold prices,” Nadelstein says. Explore your gold investing options and find the right fit for your portfolio now.The dollar is depreciatingThe value of the U.S. dollar is depreciating. When this happens, investors may want to look toward gold as a way to safeguard their money’s value while the paper currency declines.”The dollar still has room to deteriorate,” Nadelstein says. “The value of a dollar has fallen precipitously in recent years, and there are many factors that could make this decline accelerate further.”If this happens, there could be “a strong hood of change in psychology” when it comes to precious metals, commodities expert James Cordier says. “It could set into motion yet another reason to add gold to one’s portfolio — hedging against a much cheaper U.S. dollar,” says Cordier, head trader at Alternative Options. It’s a low-risk portfolio diversifierAnother reason you may want to buy into gold right now is that it can diversify your portfolio, something that’s particularly important in this period of economic uncertainty. “Persistent inflation, geopolitical instability, and concerns about fiscal sustainability create conditions that make gold an attractive asset across investor types,” says Joseph Cavatoni, senior market strategist at World Gold Council. “Consistent returns, the right kinds of diversification and material liquidity are often appealing for an additional asset in a diversified portfolio.”Better yet, gold isn’t tied to other asset classes. That means when the stock market goes down or you lose money in other investments, gold is typically not impacted the same way, giving you a good option for spreading risk across your portfolio.”Gold is a monetary metal, an asset with no counterparty risk, and has remained valuable for over 5,000 years,” Nadelstein says. “For those looking for peace of mind in uncertain times, gold can be an attractive option.”It doesn’t require a lot of capitalBuying gold doesn’t require a huge investment, and there are quite a few ways you can purchase the precious metal without much capital. So if you’re looking to diversify or safeguard against the falling dollar, chances are that you can do so pretty easily. One option is through fractional gold.”Fractional gold is one of the best ways to invest in gold without locking up a ton of capital,” Elliott says. “An investor can do this through an ETF, a digital gold platform where you buy the gold and it’s stored in a vault for you, or you can buy a physical coin or bar that’s smaller than an ounce, like a 1/10 ounce Gold Eagle.”You can also try dollar-cost averaging, which lets you acquire gold over time using periodic fixed investments, or buy into a gold mutual fund or stocks. Gold individual retirement accounts (IRAs) can be another option if you’re hoping to use the gold toward retirement.If you’re not sure which is the best way for you to buy into gold, talk to an investment professional. They’ll help you make the right move for your money. The bottom lineGold’s current price tag may seem daunting, but experts say it still has plenty of momentum left. With inflation running high, the dollar weakening and rate cuts likely on the horizon, gold could continue to see strong demand. At the same time, its history as a safe-haven asset and its role as a portfolio diversifier make it a valuable tool for managing risk in uncertain times. You don’t need a fortune to get started, either. Whether you invest a little through fractional coins, gold exchange-traded funds (ETFs) or dollar-cost averaging — or take a bigger position — gold remains an accessible option.
