Investing in Gold: Has the ship sailed on gold and silver? |

Investing in Gold: Has the ship sailed on gold and silver?

Allen Rowe

With gold reaching the $1,400 mark and silver pushing $30, some are asking if precious metals have reached their pinnacle. The returns for those who have bought silver and gold have been phenomenal, but what does the road ahead look like?

Silver has pushed hard from $25 to nearly $29 from Nov. 3 to Nov. 9, and if we look at silver over the span of a year we can see that it has nearly doubled from its low of just under $15 back at the beginning of February. Part of this upswing is that many feel silver was undervalued compared to gold, hence it has received more attention in this latest run on commodities.

Gold has reached a new higher level this week when it achieved $1,400. If we look back even further we can see that it has been on a steady increase since 2005. In 2010 gold is up nearly 40 percent, and if we go back to 2005 it has just about tripled.

Looking at those types of numbers one could ask if it is too late to buy silver or gold. If we look at gold’s climb it has been a steady and upward trend. This trend has been fairly orderly so far as it has made its ascent. Yes, there are ups and downs along the way, but the overall trend has been a steady increasing climb.

Silver’s road is always a little rockier. The swings up and down are much greater through its ascent, but the overall look is the same. Silver has increased tremendously during the last five years, up over 370 percent from its lowest point, but the trend still looks to be in a solid upward direction. Silver may likely experience a short term correction in the near future. This will be more of a function of profit taking rather than an ended streak. But, if you are waiting for that correction before you buy it may not come.

Our consistent advice on buying gold or silver is still not to overload, but to make sure that it is part of a strong portfolio. If you compare the returns of metals to that of interest paid by CD’s over the last five years it is staggering. Even if metals do not perform as well as they have they will most likely beat the abysmal rates paid on CD’s. If you have money in CD’s it may be wise to reinvest some of it in precious metals.

With all of the factors that affect gold and silver it is impossible to predict the future for them, but the major factor for their increase is still in place. The dollar, as well as a host of other currencies around the world, is experiencing weakness. Much of the news about the dollar continues to confirm this trend. Currency corrections are nothing new to world markets and have been seen before. Our dollar is not immune to fluctuations and devaluation no matter how strong it is. Some are now even comparing our dollar to post World War I German marks, and if that is the case not only has the ship not sailed yet, but it is still loading up at port for potentially its greatest voyage ever.

• Allen Rowe is the owner of Northern Nevada Coin in Carson City.