Should you invest in gold if the economy improves?

Gold can be a smart investment in any economy, even one showing signs of improvement.

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Interest rates are high and inflation is still persistent. But if you look closely there are some encouraging economic indicators. The latest came on Friday when the Labor Department released its monthly unemployment numbers. While the unemployment rate actually ticked up from 3.4% to 3.7%, employers added 339,000 jobs in May. That was significantly higher than the 190,000 new jobs economists expected for the time frame. 

“The labor market continues to move full speed ahead, with the biggest gains in the services sector,” Bright MLS chief economist Lisa Sturtevant told CBS News following the report release. 

While the overall economy still has a way to go to get back on track, it’s also possible that the Federal Reserve could keep interest rates unchanged when they meet later this month, as they recently implied. That would also be welcome news following 10 rate hikes dating to March 2022. Inflation is already the lowest it’s been in two years

In this environment, with some encouraging signs, but more work to be done, investors may be looking closer at where they put their money. For example, gold is often considered a smart investment during economic downturns or when inflation is raging. But is worth investing in at this point and time or should you look elsewhere? That’s what we will break down below.

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Should you invest in gold if the economy improves?

While gold has a well-earned reputation as a hedge against inflation and as a boost in a struggling economy (it often has an inverse relationship to the dollar), it can be a smart investment to pursue in other economic climates, too. Here are three reasons why you should invest in gold even if the economy improves.

It can diversify your portfolio

If you’re one of the millions who have seen their 401k and retirement savings suffer in recent months and years then you already know how important it is to diversify your portfolio. You should never be totally reliant on one particular asset as it could hurt you when that asset inevitably underperforms. Fortunately, gold can help. By putting a portion of your money into gold you can better safeguard your funds for rougher time periods. 

Granted, you generally won’t get the same return on your investment as you would with riskier alternatives like stocks and bonds. But you also won’t put yourself in a position where you’ll lose significant sums either. By diversifying your portfolio with 5% to 10% in gold you’ll better position yourself to weather diverse economic climates. And if the economy improves you’ll enjoy those benefits, too. 

Learn more about diversification with gold here now

It’s easy to sell

Unlike some other investments, there has always been and will likely remain a strong interest in gold. Because of this, it will be an easier investment to sell than some other, more convoluted ones. Gold, after all, is considered a liquid investment, meaning you should be able to easily sell it for cash at or around its market value at the time of sale. And you can do so in multiple ways, including via gold futures, a gold IRA or a gold ETF. Just make sure you – and your buyer – are aware of the price of gold at the time of sale so that the process can be transparent and simple to complete.

The price is consistent

Gold is currently worth around $1,960 per ounce. While that figure has been higher in recent months it hasn’t been dramatically lower, either. Between June 2020 and June 2023, gold has been at a low of $1,631.70 and a high of $2,048.15, according to the World Gold Council. While there are unavoidable dips and rises in that three-year period, overall it’s consistent, especially when compared to the larger market volatility. And consistency – regardless of the state of the economy when investing – is key. Gold can generally provide that, letting investors spend more time working on other parts of their portfolio.

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The bottom line

The worst of inflation and the high interest rates to battle could be behind investors. Or there could be some additional, temporary economic pain before things finally settle down. Regardless of where the economy heads in the short term, gold investing can help. By investing in gold Americans can more effectively diversify their larger portfolio. And, if they change their mind, they should have a relatively easy time selling off their investment. That’s for many reasons, but largely due to gold’s consistent price and value, especially when compared against other, less reliable investments.