When Is The Right Time To Make Gold Investment?

 When Is The Right Time To Make Gold Investment?

Gold investment can be done through ETFs (Exchange Traded Funds), purchasing stocks in gold miners and related companies, and purchasing a physical product. There are as many reasons for making investments in metal as they do methods to make those investments.

A Brief History Of Gold

In order to completely evaluate the aim of gold, one must trace back to the beginning of the gold market. While the history of gold started in 2000 B.C, when the ancient Egyptians initiated designing jewelry, it wasn’t until 560 B.C. that gold began to perform as a currency. At that time, merchants desired to form an easily transferable and standardized form of money that would facilitate trade. The establishment of a gold coin stamped with a seal looked to be the answer, as gold jewelry was already broadly recognized and accepted throughout varied corners of the earth.

Following the appearance of gold as money, its significance prevailed to increase throughout the U.K. and Europe, with remains from the Roman and Greek empires notably displayed in museums around the globe, and Great Britain forming its own metals-based currency in 775. The British pound, shillings, and pence were all dependent on the amount of gold or silver that it portrayed. Eventually, gold symbolizes wealth across Europe, Africa, Asia, and the Americas.

Gold Investment: Gold In The Modern Economy

Even though gold no more backs the U.S. dollar or any other global currencies, it still carries significance in the present society. It is still crucial to the global economy. To confirm this point, there is no requirement to look further than the central bank’s balance sheets and other financial entities, such as the IMF (International Monetary Fund). Currently, these entities are responsible for owning almost one-fifth of the global supply of above-ground gold. Along with that, several central banks have supplemented their current gold reserves, portraying concerns on the long-term global economy.

Gold Preserves Wealth

This is another reason why you should make a gold investment. The reason for the significance of gold in the modern economy revolves around the idea that it has effectively preserved wealth throughout many generations. The same cannot be asserted in the case of paper dominated currencies. To understand the concept better let us have a look at an example. 

In the early 1970s, one gold ounce was equal to $35. Let us assume that was the time when you had the choice to either hold just $35 or an ounce of gold. They would both offer you the same things. However, if you carried the ounce of gold in the present day and converted it into today’s value, it would still be enough to get you what you wish, but that would not have been possible with the $35. In a gist, you would have lost a good amount of your wealth if you planned to hold the $35 as opposed to the one gold ounce because its value has increased.

Gold As A Safe Haven

Whether it is the pressures in Africa, the Middle East, or elsewhere, it is becoming highly obvious that economic and political uncertainty is another truth of our modern economic scenario. For this instance, investors typically search for gold as a safe haven during times of economic and political uncertainty. Why is this? 

Well, history is filled with political coups, collapsing empires, and the collapse of fiat currencies. During such scenarios, investors who had gold holdings were successful in protecting their wealth and, in some scenarios, even used the object to escape from all of the commotions. Accordingly, whenever there are news occurrences that trace some form of global economic uncertainty, investors will often purchase gold as a safe haven.

Different Ways Of Gold Investment

One of the prime differences between investing in gold a few hundred years ago and in the present is that there are many more investment avenues. The profits earned can be measured using a gold investment calculator. The avenues are:

  • Gold Futures
  • Gold Coins
  • Gold Companies
  • Gold ETFs
  • Gold Mutual Funds
  • Gold Bullion
  • Gold Jewelry

Is It The Right Time To Invest In Gold?

Now the real question arises, can you do gold investment today? Gold investment prices in India have increased nearly Rs 2,000 per 10 gram since the starting of this month. Experts think that the gold bulls are coming back as inflation issues increase across the world. The trend was also portrayed in gold ETFs and gold mutual funds. Gold ETFs prevail to attract the attention of the investor as they harvested net assets worth Rs 303.6 crores in the last month. This number was smaller compared to September as there was a sharp rise in gold prices. In the past one week, gold funds somehow secured the top position in mutual fund return charts. There are many gold investment opportunities like SBI gold investment and many more which you can consider. According to Chirag Mehta, Senior Fund Manager, Alternative investment, Quantum Mutual Fund,

"The Federal Reserve maintains that interest rate hikes are only expected by the end of 2022, which combined with rising inflation translates into lower real yields and has revitalized the trade in gold. Investors are getting nervous about inflation getting ingrained in the post pandemic world and the Fed underestimating multi-decade high inflation and making a policy mistake. In addition, rising inflation is expected to impact corporate profits, hurting the global economic recovery as well as the stock market rally. This is good news for the yellow metal as investors will choose gold to position their portfolios for a stagflationary scenario."

Conclusion

Gold investment has both disadvantages and also advantages. If you do not wish to hold physical gold, purchasing shares in the gold mining companies can be a safer choice for you. These are known as digital gold investment. If you think that this can be a safe bet against market fluctuations like inflation, investing in jewelry, coins, bullion are some of the ways which you can consider. Other than that there are many gold investment schemes as well which you can consider.

Yang Liú

Yang Liú is a writer who revolves around business, investing, technology and electronics. Her articles are constant proof of her expertise in these niches.

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