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Investing with gold: is now the right time to rethink it?


No one respects the idea of keeping your life savings under a mattress. It is equally unwise to keep it in a current account that generates little to no interest. When money is invested, however, it goes to work for us. This is why the whole world of stocks and shares has come into being. This is why it may be time to rethink investing with gold.

Gold is the most ancient global currency. It has been deemed valuable as far back as 4500BCE when it was found in a person’s burial plot. These days people invest in physical gold, gold ETF’s, futures contracts, or gold mining companies. They also purchase bullion, gold coins, or wearable gold in the form of jewelry.

Is now the right time for investing with gold?

The question is: Is it wise to be investing with gold, and is this a good time to do so? Let’s discuss this right now.

The current economic situation

The world has been plunged into economic uncertainty thanks to the Covid pandemic. The Brexit process has yet to be fully resolved, and its financial implications have not yet been experienced. The US/China trade war continues to endure, and the risk of terrorist acts remains a real possibility.

These conditions have been viewed as a textbook scenario by some investors. According to this Commodity Supercycles review, this has produced the perfect storm for gold value. The Federal Reserve has brought down interest rates to virtually zero. Currency has been devalued and the dollar has slumped. When there are negative interest rates or massive government debt, gold inevitably increases in value.

Why this happens

Many stock market decisions are made emotionally rather than financially. When people see a potential economic recession in front of them, they respond out of fear. They want to move their money into a safe haven. It’s true that the price of currency-backed assets can go up, but their actual value can diminish.

Investors know that gold prices don’t go all over the place when inflation goes up. Stock market prices and the value of gold are not harnessed together. That’s why investors jump ship and turn to investing with gold when they are anxious.

Signs for optimism

Some people are saying that equity valuations are significantly higher than historical averages. The current financial climate could end up with the price of gold being returned to its 2011 high when it sold for $1,900 an ounce.

Investors may track the SPDR Gold Trust: PowerShares Dollar Bullish (NYSE-UUP) price ratio. If they discover that the GLD-UUP rises above and stays there for around one hundred days, this means gold is likely to perform better than other investments.

Gold may reduce in value, but when the economy takes a knock it can recover quickly, so investing with gold will be providing a good hedge against inflation.

What are the risks?

If the economic climate changed and people felt optimistic once more, stock prices may rise again. The value of gold could then return to a lower figure. Nothing is safe in this world, and it’s a fact that gold value can be changeable. It can soar at one stage, and stay low for a period of time too.

If physical gold is bought, it will have to be securely stored. Gold ETFs (Exchange Traded Funds) is an option for some, but there is always the potential for a hacker to steal the money.

Playing safe

Investors rarely put all their eggs into one basket. If they have a broad investment portfolio, their money is safer. If one investment crashes and burns, the others will hopefully minimize the financial damage.

Some people choose to have 5 to 10% of their total funds invested in gold. As the other investments go up and down, people amend their gold allocation so that it remains at the same percentage. This may appear strange to a layman, as the investor may be buying more gold when its value and popularity has sunk. When gold becomes popular again and everyone’s buying it, the canny person may be taking no action that involves investing with gold.

The reality is that it is only by regularly reviewing and amending a person’s investments that the best gains can be made over timein investing with gold or anything else. Spreading the risk over several types of investment is advised, to be wise.

Anyone who plans on making financial decisions should secure the services of a quality broker. It’s best to look at their success rates, testimonials, and how long they’ve been working.

When the time is right, it might be that gold is the investment of choice. People may use it for a short or long term investment, or to create a rainy day fund. Then, who knows for the future of investing with gold? It may provide pleasing returns at a time when stocks and shares take a tumble. It is certainly easy to redeem, and the market value at the time will dictate the return on investment.

ALSO READ: How to get started with a jewelry business.

About Inna Rosputnia

Inna Rosputnia is a successful futures trader and wealth manager, working with individual and institutional clients. She is founder and CEO of Lady F Wealth management. Inna graduated from two universities and has a Master degree in economy and international relations. She is also a well-known philanthropist. This year Inna joined the Cherie Blair Foundation to make her contribution to women’s empowerment. She believes that building confidence is the first step every woman should make to open her true power, strength and world-changing capability. Inna is author of the book Basic instinct of woman-trader.

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