Gold has been a store of value and a symbol of wealth for centuries. Whether you’re a seasoned investor or just starting out, understanding the dynamics of gold investment can be immensely beneficial.
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| Photo by Jingming Pan on Unsplash |
Why Invest in Gold?
- Wealth Preservation: Gold acts as a hedge against inflation and currency devaluation. During economic downturns, its value tends to rise, providing stability to your portfolio.
- Safe Haven: When global uncertainties increase (think geopolitical tensions or financial crises), investors flock to gold as a safe haven asset.
- Diversification: Including gold in your investment mix diversifies risk. It doesn’t always move in sync with stocks or bonds, making it an excellent diversification tool.
How Much Gold Is There?
- The total volume of gold mined to date would fit into a cube measuring 21 meters. Remarkably, nearly 90% of the world’s gold has been mined since the California Gold Rush of the 1850s.
- Half of the gold mined over the last decade has been transformed into jewelry, while just over a quarter became bars and coins. The rest serves technology and investment purposes.
Who Owns Gold?
- The US holds the world’s largest gold reserve, weighing in at over 8,000 tonnes. This represents about 4% of all gold ever mined.
- The UK, after selling off 400 tonnes during a 20-year low, currently accounts for 310 tonnes of gold held in vaults inside the Bank of England.
Factors Affecting Gold Prices
- Gold is characterized by a relatively static supply. The three largest gold-producing countries in 2022 were China, Australia, and Russia.
- As supply is limited, gold prices are highly sensitive to changes in demand. Over the last 30 years, the price per ounce has surged from around £220 to over £1,610 in November 2023.
How Can You Invest in Gold?
- Physical Gold: Buy gold bars or coins. These are tangible assets you can store securely.
- Gold Mining Stocks: Invest in shares of gold mining companies. These stocks often move in tandem with gold prices.
- Gold Exchange-Traded Funds (ETFs): These funds track the price of gold and provide liquidity.
- Gold Futures: For sophisticated investors, trading gold futures or futures options is an option.
Remember, while gold’s short-term movements can be influenced by various factors, its long-term trajectory has shown steady growth. It remains a timeless symbol of wealth and a valuable addition to any investment strategy
This
article is not advice and has not been prepared in accordance with legal
requirements designed to promote the independence of investment research – no
recommendations are given in the buying, selling or holding of any investments.
Past performance is not a guide to the future. Investments rise and fall in
value so investors could make a loss.