GOLD can be a good long-term investment, and it’s available in more ways than simply buying bars or jewelry.
The history of gold dates back to the BC era but it’s still quite valuable today, with the price depending on supply and demand.
Gold can be a good long-term investment, but there are risks involvedCredit: Getty
Typically, ahead of a potential economic downturn, investors like to stock up on the precious metal.
For example, between June 30, 2007 and November 20, 2009, the price of gold jumped 76%.
In comparison, the S&P 500 – an index that tracks the performance of the 500 largest companies – dropped 27% over the same time period.
There are several ways to invest in gold – you can physically own the precious metal or indirectly hold it through stocks and funds.
Below we explain how.
As with any investment, keep in mind that you’re not guaranteed to make money and the value of your assets could actually fall.
Jewelry makes up roughly 49% of the total production of gold, meaning it’s the single largest use for the metal.
However, it has been said to be a poor investment, unless you plan on wearing it and keeping it.
A big reason is that manufacturers can charge a premium for their work—meaning that the resale value is unlikely to be very high.
In other words, while you may enjoy wearing gold jewelry, don’t expect to make a fortune on it.
If you’re looking at buying gold directly, then you might have heard of different types of bullion.
The most common forms of bullion include coins, as well as bars and ingots.
Just be aware that you’ll have to pay a premium on top of the gold price, which can go as high as 10%.
Bullion can be bought online or through a jewelry retailer, but you’ll have to store it by using a vault or a bank deposit box.
The gold price is currently sitting at $1,802.40 per ounce, meaning buying bullion can work out very expensive.
Before you buy, do your research and ensure that the gold is real.
Stocks and funds
If you’re not keen to go through the hassle of physically owning gold, then stocks and exchange traded funds (ETF) might be your best bet.
If you’re looking at individual stocks in the gold mining industry, these can be bought from brokerages.
Some popular brokerages include Fidelity, Robinhood, TD Ameritrade, and Vanguard.
While examples of gold mining stocks are New Gold Inc, AngloGold Ashanti Ltd and Gold Fields Ltd.
ETFs, on the other hand, can be traded like individual stocks, but they contain multiple holdings of companies, commodities, and bonds.
For ETFs, you can check out SPDR Gold Shares and Sprott Gold Miners ETF.
Before you invest in either stocks or funds, keep in mind that the value of your investment could go down.
In other words, don’t invest more than you can afford to lose or into a company or fund you don’t fully understand.
Also make sure to double-check the fees of any brokerages before you sign up.
Risks of investing in gold
When looking at owning gold directly, you run the risk of the resale value dropping.
Meanwhile, volatility in both the short-term and long-term is a concern when it comes to stocks and ETFs, meaning prices can fall.
The price of gold has been on the downswing since the Federal Reserve signaled that it might raise interest rates sooner than anticipated.
Gold prices have previously slid when the economy has grown and interest rates have spiked.
The price of gold and silver went up in February this year, as investors on Reddit shook up the stock market.
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Phillip Peters is an independent journalist, entrepreneur, digital marketer and press release publisher. He has a soft spot for technology, gadgets, cryptos and writing about health and politics. He also loves travelling the world! Phillip has been working with KukaUSA full time since September 2018.