Gold has been considered one of the most reliable assets for thousands of years. Its value does not depend on inflation, political crises, and other economic shocks, which makes it attractive to investors seeking to preserve and increase capital.
In this article, we offer to evaluate the features of investing in gold. You can learn more about profitable investments and financial management on the https://rates.fm/ website.
Is It Profitable to Invest in Gold?
Gold is one of those investment assets that are maximally protected from almost any crisis. It can be considered a long-term investment tool – the price of precious metals fluctuates slightly and increases gradually, so it is not a way to make money instantly. Unlike other investment instruments, such as securities, a crisis can even contribute to an increase in value.
For example, in 2020, during the coronavirus pandemic, the stock exchange rate updated its historical maximum over the previous 10 years – the cost of a troy ounce almost reached $ 2,000. Many investors are eager to invest in gold.
The prospects for investing in gold are such that investment demand may still grow. Against the backdrop of inflation, geopolitical instability, and other shocks, investing money in precious metals is still a good way to protect savings.
Central banks of many countries are also eager to invest money in gold. This is due to uncertainty and high inflation. Due to the limited volume of precious metals production, their price does not fall, although it does not grow very quickly.
The largest holders of gold in the world are the Central Banks of the USA, Germany, Italy, and France. So if your choice is to invest in gold or Bitcoin, it is safe to say that gold offers more stability.
How to Invest in Gold to Make Money?
You can invest in gold in different ways. Not the most reliable is to buy gold jewelry, the fashion for which changes quickly, which reduces the cost. The best ways to invest include buying futures, physical gold (investment coins, bars), and buying shares of reliable gold mining companies.
Buy Gold Bars
Investing in gold using bars is simple, reliable, and safe. The object of investment is bank gold bars, which come in several types: measured and standard. The minimum weight is 1 gram of gold, the maximum is usually 1 kg.
Each bar has a quality certificate, securely packaged. They do not have a denomination, like coins, their value does not depend on the preferences of collectors or circulation – it is simply gold by weight. The purchase price of gold bars is determined by the bank depending on the number of grams of precious metal – in some banks it is more profitable to buy larger ones.
The price for the same weight varies – each bank sets its own markup. You can store the bullion at home or in a bank, for example, by renting a safe deposit box. There are several ways to sell it – to a bank, to a private buyer, to a pawnshop, to jewelers.
Buy Gold Coins
Coins are another investment tool. This investment option is used by investors and collectors. Each coin has its own denomination, the circulation is usually limited, they are not put into circulation. In fact, this is the same purchase of precious metals in the form of physical gold. You can buy two types of gold coins:
- Investment coins. This is metal by weight, issued in large print runs, does not represent collectible value, but is easier to sell. Suitable for long-term investment.
- Commemorative coins. They are of value primarily to collectors. They have limited print runs (on average, no more than 25,000 pieces in one). The cost of such assets is primarily determined by demand – the rarer the coin, the higher its price. Selling gold coins of this type can have a number of difficulties, but the potential return on investment is higher.
The cost of coins is also tied to the rate of precious metal, but there is no official purchase and sale rate.
Investing in Gold on The Exchange
In addition to physical metal, you can use exchange-traded investment instruments to protect your savings: ETF funds.
By purchasing its shares, you are actually buying a share in an investment fund without physical gold. The value of gold ETF shares directly depends on the dynamics of the exchange value of the precious metal – the cheaper gold is on the market, the less income the investor has.
Mutual funds. Investing is done by purchasing shares, while mutual funds invest in various financial instruments related to the precious metals market – shares of gold mining companies and futures. Here, the dynamics of gold prices have a lesser effect on the investor’s profitability. It is correct to invest for the long term – at least 1 year.
Investing in Gold – Pros And Cons
Long-term investment in gold has a number of advantages:
- In the long term, such a reliable asset as gold provides profit since its price, albeit slowly, is rising.
- Gold is considered an international universal asset – it has value in any country.
- Most investment methods do not require special knowledge – opening an account at JPMorgan Chase/Bank of America or buying bars is easy, but purchasing shares or units will not be a problem either.
- Some exchange instruments allow you to earn additional income. For example, shares of gold mining companies can provide the investor with dividends.
Wrapping It Up
Investing in gold is not only a way to protect your savings but also an opportunity to diversify your investment portfolio. Each of the available methods – whether it is buying physical gold, securities, or working with gold futures – has its own characteristics suitable for different categories of investors.
Before making a choice, it is important to assess your goals, level of acceptable risk, and available budget. To learn more about financial management, investments, and the best payment services on the market, we recommend the Rates.fm service, available wherever you are, be it Los Angeles (USA) or Berlin (Germany).
