Gold has always been an attractive and one of the most preferred investment options since centuries. More often than not, investment in gold is in the form of jewelry. There are, however, other forms of investment as well such as ETFs, bullion, gold funds and gold saving schemes.
Regardless of the form of investment that is chosen, you need to remember that gold, as an asset class, is different from stocks, shares and other investment options on different accounts. Hence, it is crucial that you bear a few pointers in mind at the time of investing in it.
Mentioned ahead are four such considerations.
1. Do Not Let Emotions Take Over
One of the most important theories that every investor needs to ingrain in himself is to refrain from becoming emotionally attached to stocks and other investments. This is common among those new to the world of investment because for many of us, particular options may be more appealing than others for whatever reason.
Any seasoned and disciplined investor will probably already be aware of this, but for novices or the inexperienced, being able to keep emotions out of their financial decisions may be slightly difficult. Sound investment with lucrative returns is all about identifying opportunities without being swayed by emotions, as they can impair pragmatic thinking.
For instance, for an investor who is passionate about environmental causes may be more inclined to invest in Dell simply out of personal preference and support. This is just one example of emotions interfering with practical investment decisions, which should be avoided.
This applies particularly well to alternative resources such as gold or other precious commodities as there is a certain level of exotic or fun element that comes attached with them. A lot of investors put their money in gold to diversify their portfolios. Buying physical gold is an effective way to do so as compared to purchasing lesser-known shares of small-time companies.
2. Keep an Eye on the Dollar
It’s no secret that the price of gold is affected by several influential factors such as economic, social and political stability, demand and supply of gold and jewelry, as well as the value of the U.S. dollar. Going by the trends from the last few years, it can be said that the dollar may outplay the other factors in its ability to change the landscape for gold.
There are numerous factors that can negatively influence the purchasing power of the U.S. dollar. However, gold has always been a relentless store of value. This does not imply that gold will always lose its shine whenever the dollar gets strong. Nevertheless, it is extremely crucial that gold investors have a strong feel for the performance of the dollar as it often has the strongest impact on the precious metal.
In fact, this is one of primary reasons that certain investors have shied away from predicting a strong comeback for gold in 2015. The dollar, on the other hand, seems to be holding its ground in comparison.
3. Where Will You Buy It From?
Buying gold is starkly different from investing in a gold mining company, which is why gold investment practices can differ in nature. Hence, before you invest, you need to get a clear idea of where and how you will buy it.
There was a time when it became pretty difficult for private investors to gain access to trustworthy suppliers of physical gold. Online marketplaces, however, have been instrumental in this regard by providing secure access to the gold bullion market and handle the proceedings in a professional manner. This has gone a long way in expunging various concerns among investors.
Today, however, anyone looking to invest in gold can ensure that they buy and sell it with guaranteed purity and certifications at fair prices and store them in protected vaults around the world.
Do ensure that you educate yourself about the process of investing in gold online. You will need to figure out what currency you’ll be buying and selling in, availability of secure vaults, which vault you want to store your gold in, or if you want to physically possess bullion yourself. The answers to these considerations will give you a good idea of the crucial components that go into a solid gold investment strategy.
4. Why Gold?
It is most crucial that you have a clear understanding of why you want to include gold in your investment portfolio. The reasons could be several, but more often than not, most people who explore and invest in the gold market do so for two main purposes –
- Buy gold as a hedge against inflationIt is well-known that gold is recognized globally as a store of value, and its price generally moves in the opposite direction of a nation’s currency. This implies that, typically, even if the value of the dollar plummets, the price of gold will only get better. This is reason enough to make it a part of your investment portfolio.
- Invest in gold for long-term gainsNormally, the price of gold does not experience a huge shift (for better or worse) in a period of just a few weeks. Hence, investors expect that gold prices will rise slowly but steadily over time and will not tank in a sudden/significant manner.
Understanding the basic consideration of investing in gold will help you get a strong footing as far as investing in it is concerned. This does not imply that once you get a hold of the above ideas, you should definitely put your money in the yellow metal. Because gold is a unique investment option, it works differently compared to stocks and/or bonds. It is best to educate yourself on gold investment practices and make an informed decision.