The price of gold has been on an upward trend for about a year now, and the increase can be measured in the range of 15%, because traditionally, in periods of economic uncertainty, investors look for something calmer, safer and more stable, and often it is gold. In a way, gold is like a barometer of what people think about volatility and the expected value of money, so big rises in gold can be followed by big falls.
Economic uncertainty is not the only, but most important, factor in gold’s rise in value, as the precious metal is a tangible asset and less risky than stocks. Economic uncertainty goes hand in hand with geopolitical aspects, as well as investor concerns and expectations regarding bank interest rates and inflation fluctuations.
One of the most durable investments
If you look at the cross-section of the last few years, the rise in gold prices was boosted by the pandemic and then Russia’s full-scale war in Ukraine, which has been going on for more than two years.
Gold is considered one of the most resilient investments when interest rates are falling. Holding income-producing assets (such as bonds) becomes less attractive than holding the precious metal.
However, some investors see gold as a hedge against inflation, betting that it will retain its value even if it begins to rise sharply.
The US media CNN indicates that investors are waiting for the interest rate cut with certain concerns and expectations, because the chairman of the Federal Reserve System, Jerome Powell, will give a report to Congress, after which they may be able to get a clearer idea of what to expect from the US Federal Reserve System, or more than ten associations of regional state banks in the coming months.
Traders believe there is about a 70% chance the US Federal Reserve will cut rates at its early summer policy meeting. It must be said that these forecasts are a bit more modest than they were at the beginning of the year, when investors expressed iron confidence that a rate cut was imminent.
The right moment to profit with gold
If the goal is to buy gold, wait for its price to peak and sell it for a profit, now is the time. And if there is such a goal – to speculate on the increase in the price of gold – then most often investors buy gold through financial instruments, i.e. at a broker or bank, a fund traded on the stock exchange, which will reflect the price of gold.
The other option is physical gold, and it comes in a variety of forms and options, both in terms of appearance and weight. The offers are different, they can be viewed on the websites of gold dealers. For example, gold bars and coins, which are already well known to everyone and have certainly been seen in movies.
Gold is special in that a very small coin or bar has a large value. A one ounce coin is very close in size to a two euro coin, but the value is around 2,000 euros.
It is important to keep the gold in a safe, familiar place and not forget about it.
Another option is to buy so-called paper gold, and here there are three options – exchange-traded funds (ETFs), which operate and trade like individual stocks, gold futures or futures contracts, as well as gold certificates, which serve as proof that you own a certain amount of gold.
It should be noted that there are two beliefs among investors – some are loyal only to physical gold – buy, see and tangibly feel their investment.
However, there is no lack of investors who buy paper gold, although in this case there is a certain risk, because often paper gold is not backed by physical gold.
One thing is clear: gold is a proven form of investment for decades, and the price of the precious metal to some extent reflects economic processes. This moment is a winning move for gold. True, the benefit of this is for those who currently want to sell gold, rather than buy it, because the price has reached another record.
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2024-03-06 06:43:50
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