Is 2020 The Year To Be Investing In Gold?

One of the earliest traded assets in the world, which offers plenty of opportunities for investors, is gold. Over time, gold has proven its worth by acting as a haven in times of uncertainties or economic downturns.

Gold has been known and accepted as a medium of exchange and a symbol of wealth and power throughout recorded human history. Its durability has made it more valuable than paper currencies or any other medium of exchange. There’s no single investment in the world that comes close to beating its long-standing purchasing power and wealth preservation quality.

As a result of the economic uncertainties triggered by the COVID-19 pandemic, gold is currently the best investment in the world today. Due to the stock market crash in this COVID 19 period, the price of gold hit new highs not seen since 2012. Many investors are using gold as a haven amid this economic upset.

Investing In Gold

Investing in gold in 2020 is one of the smartest decisions you can make. However, you need to aware of the options available and weigh the risks of each option.

Gold investment is quite different from buying stocks or bonds. You need first to decide why you want to invest, and if you’re investing for the return potential or diversifying your portfolio. Your answer will determine the investment option you choose.

There are different ways to invest in gold. You can buy physical gold, either as gold bullion or gold coins, purchase shares of exchange-traded funds (ETF), or buy gold futures options.

1. Buying Gold Bullion

This is the most traditional way to own gold. Investors can buy gold bullion, which is physical gold in coin or bar form, from gold dealers or a bank. If you’re buying from a dealer, you must ensure the dealer is trustworthy. If you’re looking to invest in physical gold, you can also purchase gold jewelry. The advantage of this is that you can wear it and you can also pass it down to the next generation.

However, if your sole aim of buying is strictly for investment, jewelry may not be the best option for you because it’s very likely that you won’t be able to get back the retail price when you’re ready to sell. Also, before you buy gold bullions, be sure to have a home safe or bank safe deposit box to prevent theft. You should also have it insured.

2. Buying Gold Funds

If you’re looking for a low-cost entry into the gold market, buying gold bullion may not be your best bet. This is because you’ll have to pay for insurance and a certain amount of money to keep it safe, either at home or in the bank. Purchasing mutual funds and exchange-traded funds might be the right investment for you.

ETF allows you to keep track of the underlying price of gold without physically holding it. Exchange-traded funds and stocks generally rise and fall faster than the price of gold itself.

There are also risks involved in investing in ETFs since companies that own gold stocks face certain problems, such as political and environmental factors, and you tend to share in their losses should they fail.

3. Buying Gold Mining Stocks

Another way to invest in gold is to buy gold-related stocks. Gold miners or gold producers offer investors the opportunity to own gold without physically holding the asset. Thus, you can buy stocks in companies that are directly linked to gold.

The risk associated with this form of investment is that gold miners are susceptible to changes in the stock market. If the company fails, you don’t have any claim to the gold.

4. Buying Gold Futures and Options

If you’re an experienced investor, this option may work in your favor. It involves buying and selling gold at a certain price for a specified period. It’s mostly based on guessing; you can use options to guess if the gold price will increase or decrease.

However, you should be familiar with the gold market before using this strategy because if you guess wrong, you lose the premium you paid to enter the contract.

You can buy and sell gold futures and options through a future and options broker.

Why You Should Buy Gold In 2020

Gold is a hedge against any financial crisis, and it tends to rise during financial crises, like the COVID-19 pandemic. With the economic and financial fluctuations following the COVID-19 market crash, the price of gold is skyrocketing.

As gold has proven to have the highest liquidity in the commodity market, wise investors are relocating their wealth to gold as a haven and strong protection against the pandemic’s financial uncertainty.

Conclusion

Gold has always been a haven for investors as it has proven its ability to maintain high purchasing power, especially during times of stock market crash and financial uncertainty. As a result of the COVID 19-pandemic in 2020, there has been a stock market downturn, and the price of gold has gone up since investors are turning to gold as a more secure way of conserving wealth or diversifying their portfolio.

It’s important to have adequate knowledge of the gold market before investing in gold. The different options discussed in this article will guide you in making your decision.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes