Is gold a good investment?
The world in 2020 is a very uncertain place. With interest rates at historic lows and the global markets in flux through the effects of the coronavirus, it can seem the most daunting prospect trying to decide where to invest your money safely.
Banks offer a measure of security but, with such low-interest rates, the returns are negligible. The stock market can potentially provide good profits, but the massive daily fluctuations mean boom or bust is the order of the day – not really where you want to placing any significant portion of your wealth. Even cryptocurrencies can appear relatively appealing until you look deeper into their peak and trough performance over the years.
Nothing feels especially safe or secure right now, making investors wonder if there’s anything worth backing.
A safe pair of hands
In times of trouble, it’s often better to play safe rather than sorry. Over the years, there is one investment that has continually offered security and remains a favorite with traders, in good times and bad – namely, gold.
While gold may not offer the spectacular profits seen in other markets, it equally does not suffer the vast drops either. To use the vernacular, gold is very much a “safe pair of hands” and is the commodity most trusted by investors in uncertain times.
Gold as an investment
In many ways, investing in gold is similar to investing in your family home. It’s a way of tying up funds for the future – without necessarily making a huge, overnight profit. Gold is a form of financial insurance – rainy day money if or when you most need it. As gold rarely devalues significantly, it’s also an excellent way of passing wealth between generations.
However, this long-term view makes it different from other investments. To use the same comparison to your family home – you wouldn’t risk trading your home on the markets, nor should you particularly consider trading gold. As a commodity, it is very much a long-term investment – one to sit on rather than trade fast.
Of course, no investment is 100% secure, and the value of gold can (and does) fluctuate over time. Nonetheless, its curve is mainly upward, and, as a commodity, gold is considered far safer than stock markets, currencies, or cryptocurrencies.
As a guide, most financial advisers suggest having around 5%-15% of your portfolio in gold-stock – as safeguard insurance against other, potentially more volatile investments.
How to invest in gold
Unlike stocks and shares, when you buy gold, you buy a physical asset either in the form of gold bullion or gold coins. Trading is possible in person (generally at a bank, though other real-world specialist traders also exist), over the phone, or online.
Reputable traders like Nuggets by Grant can advise you on the processes involved and will send you the gold you’ve purchased to store safely in a deposit box or similar. Alternatively, you can entrust your gold to a specialist firm who will also set up an online account so you can monitor its value.
A finite currency
As most banks hold gold, it is a finite currency meaning it will always be tradeable should you need to cash in. Gold has been used for millennia for trade and will continue to be so – so it offers complete peace of mind as an investment. Historically, the value of gold is far less volatile than other investments. In these massively uncertain times, gold may well present your best option for investing – even if it doesn’t quite have the same quick rewards associated with other commodities.