Gold investing involves the buying and selling of gold mainly for the purpose of hedging against any economic, political, social or currency related crisis. Such crises may include a stock market crash, high inflation, war or any social unrest. Moreover, since gold is the most popular precious metal, gold investments are made for financial gains when the market is bullish.
How is Gold Investing Done?
The two main methods of gold investing are:
- Direct investment: One can directly invest in gold by owning bullion or coins.
- Indirect investment: This method of gold investing includes gold certificates, spread betting, accounts and derivatives.
Gold exchange traded funds (ETFs) and shares of companies that are engaged in the mining of gold are some of the other gold investment options.
The two main techniques of identifying good gold investments are:
- Fundamental analysis: Investment managers study macroeconomic conditions. This study includes international economic indicators, such as GDP growth rates, inflation, interest rates and productivity. An important aspect of gold fundamentals is the assessment of total gold supply and gold demand.
- Technical analysis: This includes the analysis of chart patterns, market trends and moving averages. Through such analysis, investors will be equipped to speculate in the gold futures market.
Gold Investing: Benefits
One can benefit in the following ways by opting for gold investments: