Why Now's the Time to Invest in Gold

Editors' pick: Originally published Dec. 29.

While generally speculative, an investment in gold has rarely appeared so reasonable and has become increasingly so recently. Several factors are behind a brighter sheen on the precious metal, including the stock market rally, the threat of trade wars, the hike in interest rates and gold's own depressed price.

While not without risks, the rally in the stock market could give investors good reason to look to gold for alternatives to stocks. Already at or near its high when Donald Trump triumphed last month, the stock market went on another 6% romp on the sheer hope of deficit spending.

Stocks, already expensive, with price-to-earnings multiples at among the highest levels ever may give investors good reason to direct fresh funds to gold or to diversify out of at least some of their stock holdings.

Any hopes of future stock gains could be highly vulnerable given the very real threat of trade wars, principally with China. If the two nations do come to trading blows it's widely thought the U.S. will suffer more. With its proxy being the stock market, investors have another reason to seek alternatives to a market facing a correction or worse.

Traditionally, bonds provide a sturdy flight to safety -- but not in this financial and economic climate. They have been badly beaten down and with the long-threatened interest rate hikes finally coming to pass any future capital gains don't hold much promise with yields bounding upwards.

If you liked this article you might like

Novice Trade: iShares Gold Trust ETF

Novice Trade: IAU

Wall Street's Wild Ride: Next Stop, Reality

How Donald Trump Could Affect Dividends and Your Retirement