Gold prices have hit record highs in 2020 as investors scurry towards it amidst negative-yielding debt. Meanwhile, gold mining companies have been ramping up production to keep up the pace with the growing demand. JPMorgan and Chase Bank lifted their estimates on the outlook for gold to $2000 an ounce. The point is, 2020 is looking great for the bullion.
While it’s true that the price of gold can be a bit volatile in the short term, it’s always grown in value over the long term. It’s a hedge against inflation and currency devaluation, which explains why investors default to spending their money on gold during financial crises.
This doesn’t mean that gold is a good investment option for you. Experts suggest that the best time to invest in any asset is when there’s negative sentiment and the asset is still inexpensive, providing substantial potential for profit when it regains investor interest – something that gold is pretty good at.
Comparing the Gold Prices Throughout History
To determine if gold is worth your money, you should look at its spot price. This is the price at which it can be traded at that exact point in time. Gold’s spot price on Oct 7, 2020, is $1895.33 per ounce.
To put things in perspective, gold’s spot price in 2000 was $279.29.
During the late 2000s, the price of gold hovered around $720 per ounce to $1000 per ounce. Then the economic recession happened and gold prices shot up to $1888 in 2011. In 2020, the prices of gold have returned to what they were 10 years ago.
This has been a trend with gold throughout history.
After the latest surge in demand for gold and its price, it’s entirely possible for gold to go back to another slump. When this happens, your investment in gold would not yield any substantial dividends.
Investing in Gold
There are several ways of investing in gold. You could start off by taking physical possession of gold by with gold bullion and coins. Bullion is gold in bar form with a stamp that ascertains it’s level of purity and the amount of gold.
Alternatively, you can also buy stock in gold miners, gold ETFs, gold futures contracts, and other financial instruments.
Which Type of Gold Investment is Good for Me?
Gold can be bought in different forms, so much so that one form may be superior to another depending on your investment goals. You could buy gold coins or bullions, but they have to be stored in a secure area.
Gold securities, on the other hand, move in relation to the stock market. If you invest in gold mining companies, the stock price will depend on the company’s production rate, market position, and financial health more so than the spot price.
What’s the Best Investment Strategy?
There are no one-liner definitive answers when it comes to investment strategies. Just make sure to diversify your investment portfolio as much as you can, and that includes investing in gold in all its forms.