Gold as An Investment

Buy physical gold is a good option because nowadays it is possible to keep possession out of borders. Coins, Bars, and jewelry is an option which you can store at your own safety in your home.

From ancient times to today gold as an investment remain a price option. Gold is a physical commodity with a great demand in the ornaments industry and in the modern commercial industries. Price of this commodity fluctuates because of demand and supply. It performs too good when there is a downfall in the stock market and if perform poorly when stock markets are flourishing. The real value of gold change quickly. Many times, it creates spikes and large whipsaws which may invite some unfavorable conditions. Invest in the gold because, 

  • Gold is extremely rare
  • It's difficult to diminish
  • It's finite
  • It has many uses and shapes
  • It's hard to find

Gold has a long history it was used as the base in the gold standard and used as a medium of exchange in old times. Investment in gold creates a safety feeling and source of value store to always have value it will not depreciate.

Is Gold a safe investmet?

The answer is yes because when you are investing as an individual to hold the gold for the long-term time that will save you against inflation and devaluation of currencies. But when you are investing as a trader you need to adopt a portfolio approach. You can use it to diversify your trading portfolio and you can use to hedge your stock or bonds portfolio.

Investment in gold protects you against possible catastrophe. A good example in the recent history is 2008 when every investment was demeaning with speed because of economic crises and gold was skyrocketing and act as safe haven.

The Drivers Of Gold Demand

Jewelry

5o % of demand comes from this industry especially from the emerging markets like china and India.

Physical Investment

40 % demand comes from physical investment from individuals, banks and from ETFs.

Industrial

The rest of the 10 % demand comes from the large manufacturing industries

It is clear that, 90% of demand is because of its intrinsic value. Gold is perhaps the most controversial investment nowadays because many people are against this investment but if you consider storing your value in gold than your value will not be devaluated in coming years. In last decades all the currencies lose value against gold just have a look on below snapshot.

gold as an investment

Majority of investors knows that dividends and interests are not possible when you invest in the gold and for many, this is the reason; they consider it a medium of value store instead of gains. But over the time when your value will not depreciate, you can get in uncashed. 

Gold is a valuable investment and most liquid too you can convert your gold to money and can exchange for goods. 

Gold is a volatile investment

When you are holding your value in gold that did not mean you need to keep it safe with you for decades. Its most volatile investment, which may return you good gains in the just matter of days of the month so you can cash that to book gains.

Six Reasons Gold is an Investment

There is a popular quote “Gold is the Swiss army knife of commodities”. There are a lot of benefits to invest in gold few are,

  • Hedge Against Inflation

    Investment in gold is a perfect way to protect your investments from inflation when it is used to store value.

  • Hedge Against Falling Currencies

    Nowadays Currencies fluctuate a lot and many factors are involved which one cannot control. To stay protected investment in gold is the best options.

  • Insurance policy

    Investment in gold acts as an insurance policy against geopolitical and financial market instability.

  • Store of Value

    This precious metal can be used to store value and even the gold of 50,000$ can one hold on his palm. So, along with other benefits, it makes it easily moveable and easy to store.

  • Diversification of Portfolio

    Investing in gold is also considered to diversify the stocks and bonds portfolio as it does not have any correlation with the stocks and bonds.

All of the above reasons are good enough to consider gold as an investment. For an individual investing in gold is an insurance policy against the declining economy. While for big players it offers a lot of benefits.

Is Risk Involved in the Gold Investment?

Gold, stocks, and bonds do not perform the same all the times there will be ups and downs in the future which raises the risk. It is possible to mitigate the risk in a good way with the portfolio approach. For a person who is using gold to protect himself from the currency devaluation for that individual, there is no risk at all.

But traders and investors need to mitigate the risk and try to keep that at the minimum level. The gold market has a long history of higher highs. As a trader or investor owing only Gold can be risky as price fluctuate may it may invite some serious concerns for investors.

What are Ways to invest in Gold?

There are several ways to invest in gold we list top four choice here,

#01 Gold Bullion

Buy physical gold is a good option because nowadays it is possible to keep possession out of borders. Coins, Bars, and jewelry is an option which you can store at your own safety in your home. In this way, you can store more value in less place and can carry the value you’re with. And there is no maintenance cost for the gold. If you store it in the bank’s locker, then it may cost a little.

You can buy and sell gold from the local gold dealer and from the well-established chain. Coins and bars are usually sold with a markup price of up to 4%. To calculate the gains and losses, you need to take a difference of current price with and purchase price. Only invest in gold when you consider it there are many dealers who try you sell you stories avoid from them and buy the gold at your own and keep it safe with you.

While on the other side if you invest in the billions that will not have any artistic value which is the reason if its difference from the jewelry. To buy the bullion as I wrote earlier, you need to pay the premium over the gold price maximum to 10% but in most cases remain up to 4%. There is a possibility to buy the gold bullion online.

Before you purchase gold, make it sure gold is real, and the price is a stable condition, do not buy over spikes. This commodity is more accessible to a person on average and investors can purchase gold bullion from any dealer or from the bank sometimes.

#02 Gold ETFs

Gold as an Investment

Gold Exchange-traded funds, is another option which one can avail to invest in the gold. These are funds in exchanges which invest only in gold and decisions are made by a professional, these funds enjoy all the benefits which gold enjoys. Physical back ETFs are more popular one who does not want to store the gold at his own can invest in these funds because they are similar.

While trading in ETF each share you buy will be equivalent to 1/10 ounce of gold and when you invest more, the fund will buy more gold to offer stocks. Well, you have to bear the expenses too because you are trading physically-backed product and maintenance cost transferred to investors which almost remain between 0.25% to 0.50%.

#03 Gold ETNs

Exchange traded notes can be the other option but not a popular choice for small players.

#04 Gold Miner Stocks

Another way to invest in gold miner stocks, but it’s not a perfect way. Stock traders prefer this way sometimes but it’s not the right way to invest as a company may lose while metal gains, but it is an option is stable times.

For an individual investor, the best choice is to buy the gold billions and if want to expand his choice then can invest in funds while institutional investors always look for options where the responsibility of holding did not remain at their end. 

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