Is it worth investing in gold?

8.08.2022
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Nowadays, gold is considered one of the elements of a rich and successful life. That is why most investors prefer this financial instrument. With its help, you can not only secure your capital, but also significantly increase it due to rising prices for this precious metal. In the global market, the value of gold increases every year. Most successful people, after seeing a steady rise in prices, decide to invest their money in gold. As for ordinary people, they can only think about whether it is profitable to invest in gold, and what amount is needed for the first purchase? It is worth noting that in this case, there are periods when investments can bring maximum income.

Why did investing in gold and gold become popular?

investing money economy gold

Investing financial resources in the precious metal has a number of advantages over other similar instruments.

In the world, you can see a constant increase in demand for gold. If you look at the price chart for several years, you can easily see that the value of the precious metal is constantly growing. Of course, it is impossible to grow without falling, but after a certain period of time, its value rises again, and in most cases it easily overcomes the last maximum price.

If you describe the ups and downs in the value of gold, the algorithm will look like this – 3 steps up, 1 down, 3 steps up. In some cases, after the price drops, gold takes 5 steps at once instead of three, and then 10 steps up.

It is worth noting that since the beginning of the 21st century, its cost has increased more than 4 times. If you calculate this profit as a percentage, it comes out to about 420%. Now you can see that bank deposits bring much lower annual income than investing in gold.

The supply from gold miners also remains quite high, which makes it possible to almost fully meet the demand of consumers. However, it should be understood that easily accessible deposits are becoming less, and, consequently, the cost of production will soon increase significantly. Thus, the number of offers on the global market will decrease, and the price of gold will rise sharply.

This precious metal has a specific value. Its distinctive feature is the absence of wear and tear. Often, simple items can last a person for several years, and after that their cost is reduced to zero. Stylish clothes go out of fashion, technology becomes obsolete, cars wear out and break down.

Think for yourself, will you buy a mobile phone that was released 10 years ago? Even if it has been stored in its packaging all this time and has not been used, it is still worthless. Each of us at home, probably, littered with several such models of electronics. And no one needs them at all, except to let the children play.

Now imagine that you have 50 kilograms of precious metal, in 50 years you will still have 50 kilograms of gold, but its value will be much higher than it is now.

This precious metal belongs to commodities, so its value is tied to a specific money supply. If there are economic difficulties in our country, the money will begin to devalue. The value of gold does not depend on these factors, so its value will also grow, despite the fall of the state currency.

When should I invest in precious metals?

investing in precious metals

If you are going to invest money in gold, then you need to choose the right entry point. What does this mean? Novice investors need to choose the period when the potential for price growth is greatest. To date, there are a large number of different recommendations from experts in the field of finance. These tips can be either competent or stupid. If you study them superficially, without delving into the very essence, you can note that some of them are opposite to each other. Someone believes that the exchange rate should go up in the future, and someone on the contrary claims that the value of the precious metal will decrease.

Is it profitable to buy gold? Those who have just decided to try out the role of an investor, it is recommended to buy gold at the bottom, sell at the peak. In other words, you must learn to buy precious metal at low prices and sell it at high prices.

How do I know if I should invest in gold?

When financial crises, wars, and natural disasters occur in the world, the economy undergoes major changes. The stock market does not stand aside either. The stock price can collapse in just two months. Then production begins to slow down, and exchange rates can change dramatically.

This is the reason why many investors are looking for ways to save their money. Precious metals, in particular gold, become the best tool for achieving these goals.

Options for storing money in gold

If you want to learn all about investing in gold, then be sure to check out the options for financial instruments. For convenience, we will consider options that are suitable for ordinary investors.

Gold ETFs are funds where shareholders can invest their funds in the precious metal. The price per share can reach several hundred rubles. It is necessary to buy and sell gold on the stock exchange. Each investor must pay a commission of about 1% per year on the value of their assets for owning a gold fund.

is it profitable to buy gold

Purchase of jewelry made from this precious metal. At first glance, everything seems quite simple. A person comes to a jewelry store, chooses any piece of jewelry they like, and buys it. It is worth noting that in this case you pay not only for gold, but also for the work of the jeweler, the services of intermediaries, and the profit to the owner of this store. As a result, the value of gold increases several times. As for the sale, jewelry is considered gold scrap. You won’t be able to sell it at a high price.

Gold bars are sold at world prices. Depending on the size of the selected ingot, its selling value will be determined. Everyone knows that when buying gold, its weight is taken into account. The higher this indicator is, the more attractive the price will be. In this option, you buy precious metal at a wholesale price. A discount may be provided for large buyers. If you are going to choose this type of investment, then do not forget about taxes. If a gold bar is sold, the owner must pay 18% in favor of the state. You might think it’s a real robbery, but that’s the law.

Investment coins. Currently, this type of investment has become very popular among the local population. These products can be purchased at any Ukrainian bank. According to the idea, the price of coins should increase every year, outstripping inflation. But in reality, it can be just another trick that will help attract money and make a profit for financial institutions.

Their cost is quite high. The issue of certain types of coins exceeds demand, so in the future banks will be forced to reduce the cost of these products, thereby knocking down the overall prices of coins that were previously purchased at a higher cost. Many of these items, due to their large number, are not particularly valuable for those who collect coins. But thanks to their efforts, the cost of these products is constantly increasing. To purchase valuable coins, you must at least understand numismatics. For most people, this industry is a dark forest. And don’t forget that when selling, the owner must pay tax.

Metal deposits. The main advantages of this method are easy sale and purchase. The cost of compulsory health insurance is as close as possible to global prices. You won’t have to pay taxes. However, you need to understand that you are not physically purchasing the precious metal. All information about your gold reserve will be stored in the banking organization. You can make transactions by buying and selling metal online. The disadvantages of this approach include the fact that the profit is often 3-8 percent.

invest in gold

Futures. The most obvious financial instrument is contracts for the purchase of gold on the stock exchange. The difference between the acquisition and sale may amount to tenths of a percent. After paying 18% VAT, you have almost nothing left. Operations can also be performed over the global network. A significant disadvantage of this approach is the short investment period. The contract is usually valid for several months. Of course, you can open a new contract, but this is again unnecessary actions on your part.

In order to understand whether it is profitable to invest in gold, you need to have a good knowledge, open an account with a brokerage company, replenish it with the necessary amount of money, and learn how to work on the trading platform. Do not forget that to make transactions, you will need to conduct analysis, make forecasts of price movement. There are many nuances in this area that can alienate or frighten newcomers, so most novice investors abandon this idea.

Is it worth investing in gold?

Now every person is trying to find the area that will bring him a good income, and also allow him to save his capital. After reading our article, you should decide for yourself whether to keep your money in gold. It is likely that you will prefer other financial instruments.

So is it worth investing in gold? The following conclusions can be drawn:

  • investing in precious metal allows you to save money;
  • the most optimal tool is considered to be compulsory medical insurance, ETFs, and the purchase of precious metals directly on the exchange;
  • during the financial crisis, precious metals have the greatest growth potential.

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