There are two ways to invest in gold: investing in physical gold, which involves buying gold, in the form of coins or bars, and paper gold. This second option is to hire the services of a mutual fund or buy derivatives. Finally, a third solution is to invest directly in gold company shares. In any case, this type of investment is reserved for confirmed investors, who have a certain appetite for risk. In times of crisis, is it better to invest in gold or real estate? Expect the best now from the Gold buyers Sydney services
How to invest in gold in 2020?
Investing in gold in 2019 has proven to be very profitable, and 2020 should follow this path. In 2019, the price of gold jumped18%. At the end of August, the yellow metal was listed at€ 1,400 perounce. The economic crisis linked to the coronavirus has severely impacted the stock markets. These have dropped drastically. As evidenced by the drops recorded on Monday March 16, at the close of the main European stock exchanges:
- 75% for the Paris Bourse;
- 71% for that of London;
- 31% for that of Frankfurt.
An unprecedented financial crisis (or almost), but which nevertheless allowed to note that in the event of economic collapse, some assets remain, and even display a radiant health (is the case to say). We think of real estate, but gold is no exception. In times of crisis, the time is not so much to invest as it is to save. Here’s how to invest in gold.
Investing in gold in 2020: the risks
Be careful, if gold is a safe haven, like stone, it weighs much less than in the investment portfolio. We recommend investing around 7% of your portfolio there, but no more, commodities manager at Asset Management, says: A reasonable position would be 3 to 7% of a portfolio, starting with a long-term basic position of around 3%, and then strengthening it, depending on market opportunities
From this point of view, gold is more like a pleasure investment, like wine or vintage cars. As for paper gold, it presents the same risks and difficulties as investment in the stock market: volatility, issuer risk, risk of not recovering its investment, etc.
Buy gold bars and coins
It is the most popular format for people who invest in gold. The golden woolen stockings of households are estimated at around 3,000 of physical gold.
Physical gold comes in the form of ingots, bars, wafers and coins. To buy it, you just need to present a signed purchase order to your banker, who will take a commission on this transaction, ranging between 1.5% and 2.5% of the amount.
Bars, ingots and platelets will be considered as investment gold if their weight is greater than 1 gram and their purity is at least 995 thousandths . This threshold is lowered to 900 for coins, which must have been minted after 1800, like stone, physical gold is considered a safe haven in the event of a crisis: immutable, solid, long-lasting. However, this asset is strongly influenced by two main factors:
- The interest rate ;
- The international tensions that drive investors to safe-haven assets (including gold).
Valuation and quotation of physical gold
Gold is measured in ounces, with one ounce of gold equivalent to 31.10 g. The price of the yellow metal is set by the Bullion Market Association. It is this market which regulates the quotation of precious metals (gold and silver) on the main markets of the planet and supervises their trading.