Is now a good time to buy gold? – The finances

GoldThis bright yellow metal has been the symbol of wealth for generations and generations.

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Although gold has applications in today's technology, it is most commonly used in jewelry, gold bars, coins, and investment portfolios (due to its reserve value).

This brings us to the question: is gold a good investment? And if so, Is it a good time to buy gold??

Attention: This article is not financial advice. Do your own research and consult a professional before investing.

Investing in gold: good idea or not?

Investing in gold is a good idea in times of volatility (like now), but according to many analysts and economists, it is never better than betting on stocks that exist as “premiums to gold.”

Commodities are not cash flow producing assets; By purchasing a gold bar, you will have an asset that will not produce any returns for you. Instead, you can buy companies that mine gold for excellent profits.

This is the approach of legendary investor Warren Buffett. Traditionally, he never took positions in gold, always seeing market uncertainties as an opportunity to stock up on short stocks and tolerate volatility risks, but when he finally did, he bought the Canadian company's stock. Barrick Gold (GOLD).

We suggest you take a similar approach (do your own research), without necessarily jumping on Barrick Gold, which naturally benefits from that unwanted Buffett premium, due to followers outweighing bids for its stock.

By buying companies with clear exposure to commodities like gold, we can translate our view on gold into a thesis on cash-producing assets, where the risks on the horizon are limited by owning shares in one company rather than a raw material where we must depend entirely on speculative actions. appreciation.

Otherwise, if you still prefer the classic approach, you can always buy and store physical gold through large commodity stores like SilverGoldBull or through more “techno” services like Vaulted. But, instead of comparing prices, we advise you to use the Québec compradelor.ca service to be redirected to the best prices on the market.

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Why invest in gold?

  • Heritage Preservation: Many investors have trusted gold for its wealth preservation qualities. Take the example of a comparison between owning 10 gold dollars in 1970 and owning a 10 dollar bill. The value of gold has increased since then, so that the value of gold far exceeds that of the initial investment of $10. However, the value of the $10 bill has not increased, and due to inflation, it cannot be used to buy as much as it could have been purchased in 1970.
  • Portfolio diversification: A balanced portfolio often includes diversifying assets like gold because they typically have a negative correlation with the stock market. Having a diversified investment portfolio helps reduce risk and volatility for investors.
  • Inflation protection: The price of gold often appreciates along with rising inflation rates and depreciation of the dollar. For this reason, investors may choose to buy gold as a hedge asset when they realize they are losing money. This follows the general logic that gold often retains its value, or even appreciates, when the value of the dollar falls.
  • Opportunities for “gold stocks“: Gold stock values ​​are generally partially reflected in movements in the price of the precious metal, gold. However, gold stocks can maintain profitability even when the price of gold is low. Additionally, many gold mining companies pay high dividends, which may prompt investors to buy gold stocks instead of gold.
  • Safe investment: Unlike currencies, gold is not directly affected by interest rate decisions and cannot be printed to control its supply and demand. Gold is a rare asset that has retained its value over time and has demonstrated its ability to serve as an insurance policy in the event of adverse economic events. For this reason, many investors consider gold to be a safe haven.

Read: How to diversify your savings?

Gold bars and physical gold

Gold bars are a popular investment product among investors of all types. Gold bullion is the physical metal itself in a refined format suitable for trading and can come in the form of gold bars, bars or coins. Investors can typically purchase them through a precious metals dealer, bank or brokerage firm, over the Internet or in person.

In addition to gold bars, investors can choose to purchase gold jewelry or any other physical gold product. However, gold jewelry often carries a premium price due to the labor involved and the retail price of the product.

Physical gold cannot be stored as easily as other financial assets. It takes up a lot of space and carries an additional risk of loss or theft. When you buy and store physical gold of any type, you should make sure you have insurance to cover it in case of loss or theft.

That's why many investors use SilverGoldBull or Vaulted to safely purchase and store their gold for minimal fees.

Read: How to calculate the intrinsic value of a stock?

HE “gold stocks“Are they a good investment?

Now that you know that the price of gold increases in times of crisis, does it make sense to invest in gold for the long term? Gold is a tactical rather than a strategic investment. It underperforms in the long term, but outperforms in times of crisis. Therefore, it is not a good strategy to have significant exposure to gold or rely on the yellow metal for retirement planning.

However, gold is a tactical investment because when other investments (stocks and bonds) fall, gold jumps significantly, offsetting the portfolio's decline. You can invest in gold to diversify your portfolio risk. Gold ETFs and gold mining stocks are a good way to gain exposure to the price of gold. But only invest a fraction of your portfolio, less than 5%, in gold stocks.

Read: Playing on the stock market – Guide for beginners

Conclusion

Every investment has advantages and disadvantages.

If you are opposed to holding physical gold, purchasing shares of a gold mining company may be a safer alternative. If you believe that gold can be a safe bet against inflation, investing in coins, bars or jewelry are avenues you can take to achieve prosperity through gold.

Finally, if your primary interest is using leverage to profit from rising gold prices, the futures market could be your answer, but keep in mind that there is some risk associated with any leverage-based holding.

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Thank you for taking the time to read our article on gold!

If you have any questions or tips for our other readers, feel free to share them in the comments below.

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