Gold is an excellent choice of investment for many reasons. It can be used to hedge against inflation, and it will always be of value due to its scarcity. It is a great portfolio diversifier for seasoned investors as an alternative investment. As there are many reasons why we should invest in gold, the presence of gold varieties makes it more favorable. So, how to invest in gold? Is gold a good investment? Read on to find the answers below!
Why invest in gold?
As a luxury item, gold is a highly liquid asset to invest in. Its scarcity makes the demand remain stable. On average, the annual gold demand is 4,100 tonnes with US$166bn in value. Most of the demand is driven by the jewelry industry with 54%, followed sequentially by investment (30%), technology (10%), and central banks (6%).
Gold becomes favorable among investors from individual to professional. It means gold as an investment has become more mainstream. Since the turn of the century, gold as a global investment has reached an average of 18% of growth worldwide. Central banks also use gold as their foreign reserves, which makes them triple their holdings over the last ten years.
Conventionally, investors hold their gold when the risk is high and then sell it on the rise. As a long-term investment, this would be significantly profitable. However, the latest trend of gold investment shows that investors rely on gold when the market is uncertain. This behavior influences the gold price in the short-term and medium-term, making a positive return.
How can I invest in physical gold?
In the long run, physical gold has many forms that you may invest in, including gold bars, gold coins, and gold jewelry. Whatever the reason is, buying physical gold is preferable because each form has its own properties.
Gold bars are the most favorite among experienced investors. Ranging from 25 g to 1 kg, gold bars are usually larger than gold coins. The cost is also cheaper than gold coins. You can put it everywhere since it’s easy to store. However, gold bars are rather inconvenient to liquidate since you need to sell them as a whole rather than split them into a few pieces.
Gold coins appear to be the reachable choice for the newbie. It weighs between 2.5 g and 25 g, making it easy to sell whenever you need the money. Since it is minted individually, gold coins value higher than the bars.
Instead of confining it to storage, gold jewelry is wearable. Gold shiny properties have become the reason why jewelry has made use of it since ancient times. But, as you may not know before, gold jewelry is not all pure gold. There are some metal mixes to solidify the shape since gold itself is too soft. You might also find they are losing their value due to scratching or broken.
What is digital gold?
Today, everything is digitalized. This also applies to gold. Digital gold is a virtual gold that you can buy and store without physically holding the gold itself. Since you buy it online, you can choose how many you need to buy at the current price. You can even buy gold for as little as RM1.
Digital gold is safe and hassle-free stored, which means the theft threat is no longer an issue. Even though you are not holding it physically, you can withdraw it in specific values.
To buy digital gold is as simple as online shopping. All you need is to choose the best and most trusted platform that provides digital gold. Choose how many you want to buy, whether based on Ringgit or weight. A quick pro-tip, take a look at its value for the last two weeks and see if the price is reasonable or not. Gold values are changing daily, and all you need is to take advantage of them.
Is gold a good investment?
Since inflation is raging globally, gold is considered a must-have in your portfolio. The rising interest rate and its role as a hedge against inflation are more than enough to keep at least 10% of your investment. This will protect you against possible economic downturns, including stock market crises and the devaluation of most currencies.
Should you invest in gold? Gold may offer you an investing safe haven if you’re concerned about inflation and other calamities. Though it can be just as volatile as stocks in the shorter term, gold has held its value remarkably well over a very long time.
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