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After disappointing reports by January, February i March, all eyes will be on the Bureau of Labor Statistics next week to determine whether there has been any success in reducing the inflation rate. Currently stuck at 3.5%, inflation is more than a full percentage point above the Federal Reserve's 2% target. Inflation has not only caused interest rates to fall its highest point in decades but because it has been so sticky it has also given rise to interest rates stay where they are. This has had numerous repercussions for the wider economy.
It has also led to a re-examination of investments, with many turning to other alternatives such as gold and silver. Ahead of the inflation report scheduled for release on May 15, many investors may want to consider the precious metal right now. Below, we break down three reasons why you should be investing in gold before the May report comes out.
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Why you should invest in gold before the May inflation report is released
Here are three reasons why it might be smart to invest in gold before the next inflation report comes out.
The price could go up again
The price of gold today it stands at $2,318.60 per ounce. But that price has risen considerably since March 1breaking numerous records in the process, and many experts predict will continue to increase. But if the next report shows that inflation is flat or rising, the price of the precious metal could rise again as investors scramble for a safe haven asset to add to your portfolio. And with the price of the metal already high, waiting for that to happen might not be the best move. Instead, it makes sense to buy before the price becomes prohibitive.
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You may be able to make a quick profit now
Historically, gold has not been an income generating asset. And it still shouldn't be treated as such. But with the price volatility we've seen in recent weeks and the likelihood it could rise if the inflation report hits the heat, now may be one of the few times investors could make a quick profit by investing in gold. If you buy at today's price and the published report causes that price to rise, you can make a quick profit in a few weeks, a rarity for an asset better known for long-term protection and as inflation coverage.
You can protect your wallet in advance
If the inflation report shows a rate increase, or even if it simply shows that inflation is holding steady, that could affect the performance of other assets like stocks and bonds. Therefore, it is beneficial to add some protection to your portfolio before this likely scenario. Gold can help by often holding constant value during inflationary periods. It can even increase in value, as recent months have shown, during these periods. This will then soften the impact experienced by other more volatile assets if the published report comes in higher than most want.
The bottom line
The timing behind any type of investment is critical to getting it right. And with the next inflation report due out in the middle of the month, now might be an opportune time invest in gold. By acting now, investors could get in early, before the price rises again and position themselves for a quick profit if they sell after a price increase, post-inflation report release. Plus, they'll ensure useful protection now, before they need it most.
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