The price of gold has been in the news a lot recently, as demand for the precious metal has grown year-on-year by 15% according to the latest report from the World Gold Council. What is causing this surge and how can you invest in gold if you decide to do so?
What Affects the Price of Gold?
The main factors credited with the rising price of gold are global economic instability and uncertainty in the banking industry. With some other types of investment losing value or looking riskier than before, people are turning to gold as a safe haven, a store of value, and a way of potentially growing their money.
We can see how much gold has risen with this unusual example of an investment in the metal made by South Korean officials. They spent about $2.1 million on 162 kg of gold and 281 kg of silver to build golden statues of bats in a former gold mine. It took three years to complete the project and the value of the metal in the statue is now estimated at $11 million.
There are many diverse economic factors that affect the value of gold. That’s why investors may use resources like the economic calendar that shows us when to expect updates from the Federal Reserve, bond issues, and other important factors that may indicate future price trends. Knowing when to look out for updates can help to make investing less time-consuming and potentially provide more accurate information.
Ways to Invest in Gold
Most governments hold stores of physical gold in their reserves, with Fort Knox in Kentucky holding some 147.3 million ounces of the metal. However, that approach isn’t practical for the majority of private investors. When you buy gold, you’ll typically be given a certificate that confirms your investment rather than being issued with physical metal bars.
Another option is to choose gold futures, where you’re looking to gain from price movements without actually owning any of the metal. You could look for exchange-traded funds as another way of looking to gain from gold prices without having to worry about owning the product itself.
Some investors prefer to invest in the stock of companies that are involved in gold production, such as gold mining companies. In this case, you’re expecting that their stock will increase in value if the price of gold rises.
The Future of Gold
Gold has been an investment vehicle and a store of value for centuries, and there’s no sign of that ending soon. If you’re looking for accurate estimates of how the price will change in the next few years, you’ll see a variety of estimates online. The World Bank has estimated a drop in gold prices in the next year or two while Fitch has recently increased its price prediction from $1,850 per ounce to $1,950.
Interest rates and market turmoil are among the major factors to bear in mind when it comes to the price of this precious metal, and the current price predictions may prove to be wrong if anything unexpected happens in the global economy that surprises the market.
Gold should continue to be a relatively steady investment that provides the potential for profits, but exactly how much the price is going to rise or fall is something that no one can say with certainty.
Business News