Investing in gold
Gold is avaluable addition to an investment portfolio, as we have often pointed out. In addition, it is a safe haven in times of economic uncertainty, because gold retains its value. Still, investing in gold remains an important decision: it can involve a lot of money. That is why we are happy to list once again what you should consider when investing in this nest egg.
Investing in gold: what do I consider?
There are several factors that can have a significant impact on your gold buying decision. Timing, for example, is incredibly important. We list all the considerations that are best to take into account when investing in gold.
Owning physical gold
1. Spot price
The price level is very important with gold. The spot price is the current gold price, but it never stays the same for long. There are a lot of factors that cause the gold price to fluctuate. The international financial markets, geopolitical events, market sentiment ... are all factors that help determine the gold price.
Naturally, you want to buy gold when the price is low. To do so, you need to monitor that price carefully. You can read how to do this on our page 'Monitoring the gold price'. However, there is no golden formula when it is best to invest in gold. What we do know is that the gold price has historically always risen over time. So despite price fluctuations, the average value of gold continues to rise.
Inflation, which is the general rise in prices of goods and services. Read: when life becomes palpably more expensive, and you can buy less for the same money. Generally, gold is considered a hedge against inflation.
In times of inflation, gold retains its value or this precious metal itself can increase in value. Note that when interest rates rise, gold's appeal often drops. Gold does not earn interest or dividends. The upside is that when interest rates are high, gold prices tend to be lower. In short: a good time to invest in gold.
3. Economic and political events
When the economy is down, the price of gold rises. As it does when geopolitical events occur that create uncertainty. For instance, geopolitical risks can cause exchange rates of certain currencies to fall. When investors lose confidence in currencies, the demand for gold rises.
This is because gold has been considered a safe investment for decades. Especially when conflicts, trade wars or political tensions occur, investors often look for a way to protect their capital. Gold retains its value - even during turbulent times - because, unlike money, you cannot simply print it up.
4. Owning physical gold
When investing in gold, you must choose between physical gold or gold-related investments. By physical gold, we mean gold bars or gold coins. The other option are investments in gold ETFs or gold mining companies.
When you buy physical gold from a reliable partner, you know the exact purity and weight of your purchased product. With the second option, you have to be very careful what tracker you buy or what mine you invest in. Both options have advantages and disadvantages. If you want to know more about this, be sure to read our blog 'How to invest smartly in gold and silver'.
Note that if you buy physical gold, you need a safe place to store and keep this precious commodity. This can come at an extra cost.
5. Long-term vision
Investing in gold is a good strategy for investors with a long-term view. As cited earlier, gold has a volatile price. However, in recent decades, the value of gold has increased historically. If you exercise patience as an investor, this means that in the longer term, the value of your gold is likely to rise steadily. Note that historical performance is never a guarantee for the future.
Is investing in gold for you?
Long story short: there is no ideal strategy when it is best to invest in gold. In general, though, it does pay off to invest in gold, especially if you can lock in your investment for a longer period.
Would you like more information before taking the investment step? No problem, our experts will be happy to help.