You might have heard people talking about their gold investments with some interest, but not really understanding the finer points. This can be expected if you haven’t had much involvement with investments before, or have only chosen traditional offerings at your high street bank. The best people to speak to will be specialists in the field, as they will be able to give you options for the funds you have available.
However if you are looking for an overview on gold commodities trading, this blog post should have some helpful information so you can begin your journey.
The demand for gold
The Telegraph recently published an article called “Appetite for gold rises to six-month high”, but the demand for gold has actually been rising steadily since 2000. This can be mostly be attributed to developing nations using their wealth to fill their reserves with bullion; this is important as gold has the label of being relatively inflation-proof. In 1999, Gordon Brown sold a lot of Britain’s gold reserves for between $256 and $296 per ounce, however the highest it has been since was $1,895 in 2011 – demonstrating the potential investment returns if purchasing at the lower price.
There is a reason that people choose to invest in gold; it is thought to be safe enough to hold its value in times of economic trouble. Put it this way, the banks cannot affect or manipulate it like they can do with interest rates and the number of money notes in circulation. Gold cannot be printed, meaning what already exists increases in popularity, often drawing prices upwards. That means that you could consider investing in gold during times of uncertainty in the markets, when you aren’t sure about traditional investment opportunities.
How to invest in gold
If you are very interested in investing with gold, you should make sure to do your research first. There is never any guarantee that you will be able to sell your commodities once you have acquired them, so you should understand the risks associated with this, just like any investment. Past performance should not be an indicator of future market performance, so you should seek advice from an appropriately qualified adviser if you are unsure of whether the investment is right for you.
When the time comes to actually make the investment (if you decide to go ahead with it), you could look at exchange-traded funds (EFTs) which allow you to back the bullion price directly. These are traded on a stock exchange like shares are; this means you can track the performance of your commodity. It isn’t just gold that is available via ETFs; you could also consider silver, platinum and palladium with the right advice.
Aside from EFTs, some actively managed funds also focus on gold. This means that a fund might invest in gold mining shares, or just have exposure to gold. For example the Troy Trojan fund has 14 percent of its portfolio in gold and gold mining shares. The manager believes that the timeless currency should protect wealth over the long-term.