How to invest in gold in 2023? Is it a good investment to buy gold ? In recent years, gold has been considered by many as an important investment asset . Major analysts and investment fund managers recommend gold to be part of our investment portfolio, the precious metal is often used as a hedge against the dollar , economic and geopolitical crises, inflation and variations in interest rates, there are many ways to invest in gold , therefore we are sure that some of them will work. will adapt to your profile goldco.
Not only small investors buy gold , in recent years the large Central Banks around the world have increased their holdings of gold, this is because countries seek to reduce their dependence on the dollar as the main currency of their reserves.
Gold is negotiated and its price is set on the London Futures Market , this being the largest market in the world where future contracts and options for the main raw materials are negotiated. This market currently has a sales volume that exceeds US$8.5 billion dollars annually.
The precious metal uses the ” troy ounce ” as its main trading weight and the reference currency for purchase and sale operations is the US dollar. Gold is highly volatile and variations in its price depend on many factors that we will explain later. .
The previous graph shows us the evolution of the price of gold in the last five years, the precious metal reached a maximum of US$ 2,070 in mid-2020, just at a time when the COVID -19 pandemic forced countries to close their borders. In order to contain infections, since then with the appearance of vaccines and the reopening of the economies, gold began to correct to a minimum of US$1,700.
At this time, gold is trading in a lateral range between US$ 1,880 and US$ 1,720 per troy ounce. In recent days, the precious metal has registered a significant rebound due to inflationary pressures in the United States , however, its gains were overshadowed due to the advance of the dollar against global currencies as expectations grow of an upcoming interest rate adjustment in the US.
What factors influence the price of gold?
One of the most important catalysts that influence the price and trend of the precious metal is the US dollar . In recent years, gold has become more sensitive to variations in the greenback, especially since the Federal Reserve began a progressive rise in the rates. interest rates in the United States.
On the other hand, gold is subject to a round of data regarding the health of the American economy. Every week and month economic data (employment, inflation, GDP, retail sales, consumer confidence, etc.) is published in addition to the forecasts. of the FED regarding monetary policies, all these factors contribute to the movements of the precious metal.
And how can I invest in gold?
1.- Buying physical gold
The purchase of physical gold is the most popular option among individual investors around the world, since it gives the client the option of having the precious metal under their custody. Throughout history, many civilizations have recognized gold as the best refuge value since it never loses its value.
However, investing in buying physical gold increases our costs, since we must find a safe place for its storage, such as bank vaults, on the other hand, there is the punishment that could be applied by physical gold dealers, which which is a problem when selling our gold.
2.- Invest in the stock market by buying ETFs
Gold ETFs are exchange-traded funds that replicate the behavior of the price of gold. This is a better alternative than buying physical gold, due to the fluidity of trading, since they can be bought and sold very easily and safely.
The best-known ETFs on the stock market are (GLD:NYSE), (NUGT:NYSE) and (DUST:NYSE). These are listed on the largest stock exchange in the world, Wall Street, and can be acquired from any country through an agent. stock market
GLD : It replicates the performance of the gold price in favor.
NUGT: Replicates the triple performance of gold mining indices.
DUST: Inversely replicates the triple performance of mining indices
For this type of investments, it is recommended to take precautions since these investment instruments have a high degree of volatility.
3.- Investment Funds
This type of investment is for people who do not dare to buy physical gold and ETFs, but somehow seek to benefit from the rise of the precious metal, these investment funds are more conservative, these funds invest by buying mining stocks ( Buenaventura , Barrick Gold , Newmont Mining , etc.), here the returns are minimal but safe.
Important . – Gold is considered a refuge value in the face of economic and political crises. – Gold is also used as a hedge against the dollar, inflation and interest rates. – We must monitor the dollar and the economic calendar since these influence the price of gold.
What is the disadvantage of buying physical gold?
Buying physical gold has some disadvantages that everyone should know, for example it is less liquid , that is, it will not be easy to sell it, the only things that would do it are authorized agencies and banks due to its high value.
Security is another disadvantage, since greater security will require a safe or a deposit/warehouse that can be contracted at a bank, which will increase the cost of acquiring the gold bullion . It does not earn dividends, you will only obtain a profit or yield if it increases in value.