“Prediction is difficult, especially when dealing with the future”

So says an old Danish proverb, misattributed to everyone from Niels Bohr to Yogi Berra. And while we’re certainly no soothsayers, nor do we offer investment advice, there are a few things that time has shown about the inverse relationship of economic conditions and prices for bullion and many collectibles.

Trouble Spells Opportunity
When financial outlooks are rosy, people look for ways to ride the wave of growth. While this is a reasonable strategy, it can also lead to overbought positions in stocks, currency, and other speculative products. This often leads to static or falling prices for traditional investments like gold and other commodities. It can also hold down prices on collectibles like rare coins and fine art.

But since what goes up is likely to eventually come down, cautious investors become nervous in overbought situations and look for safe places to store their newly-found wealth. They frequently look to those same commodities that have been out of favor to once again buy low and hold or sell high. This creates a teeter-totter relationship like that between stocks and gold. When one is up, the other is usually down. The trick is knowing when to move from one to the other.

What’s Hot and What’s Not
Gold prices have been depressed for quite a while; silver even more so. The historical ratio between gold and silver prices also suggests that silver is selling at a steep discount relative to gold. Both metals, along with platinum and palladium have crept upward recently as stock prices have fallen and trade polices remain uncertain.

Rare coins are selling at substantially lower prices compared to recent highs, suggesting there is some upside to them, especially longer-term. On the other hand, top-quality fine art is bringing record prices and has shown an upward trend for over a year despite a bull market for stocks.

Will investors start moving to metals and rare collectibles and drive up prices? Is the art market about to undergo a major correction? Your guess is as good as ours.

Is It Time to Make a Move?
Like we said at the beginning, prediction is tricky. Does the recent stock market downturn and corresponding uptick in gold and silver prices signal that it’s time to reallocate your assets? Or is this simply a short-term correction that argues for staying put?

We don’t pretend to have the answer. All we can say is that the past tends to predict the future. Are you a player or a stayer? The choice is yours and depends largely on your personal assessment of the markets and your risk tolerance.

Most investment gurus recommend a balanced portfolio of stocks, bonds, commodities and other products to smooth out peaks and valleys in favor of modest growth that compounds over time. It’s a strategy that’s been proven over the years and sounds like a good one to us.

We’re Here to Help
If you’re looking at bullion, coins, or currency, The Great American Coin Company offers a number of options. Visit our website
for a look at the many ways we offer investors and collectors to add those products to your portfolio. And keep your seat belt fastened in case of unexpected turbulence.