By Luis Aureliano
Since the financial crisis in 2008 gold has become the go-to ‘safe haven’ asset during times of market turmoil. From the height of the
financial crisis in September 2008 until March 2009, when the stock market started its post-crisis recovery, the price of gold rallied from USD 750 to USD 950. That was a 26% price increase. Gold continued its rally until it hit its all time high of USD 1,917.90 per ounce in August 2011.
Since the 2008 financial crisis gold has somewhat developed a negative correlation with the performance of stocks. That means that on days the stock market is up, gold tends to be down. This can also be a prolonged trend, as seen in January of this year, when stocks tanked and gold prices jumped. Having said that, it is also important to note when looking at correlations, that correlations tend to break down over time, so this correlation is not set in stone forever.
Year-to-date the spot gold price is up 16% and is currently at around USD 1,230 per ounce. This is partly due to the horrendous start to the year that stocks have had and, partly, because many emerging markets investors are buying gold as domestic currencies such as the Malaysian ringgit, the Indonesian rupee and the Thai baht have weakened heavily against the U.S. dollar in the last 12 months. In both instances gold is the go-to investment due to its safe haven aspect. As uncertainty in global markets looms, gold is proving itself to be a lucrative investment, once again, in 2016. Below you can find the three best ways you can invest in gold, should you also want to benefit of gold’s ‘safe haven’ status during times of market turmoil.
Buy Physical Gold
If you want to invest in gold you could buy gold bars online at vendors such as Global Intergold. Gold bars can be purchased in many different price and weight categories, so that you can find the right gold bars suitable for your investment needs. Physical gold is an excellent store of value and the most direct way to invest in gold. Also, it has the added allure of you being able to touch and feel your asset.
Purchase Gold ETCs
Alternatively, you could also purchase so-called Gold ETCs. ETC stands for exchange- traded commodity. ETCs function effectively in the same way as ETFs (exchange-traded funds), except they mirror the price movements of an underlying commodity as opposed to a set of securities. When buying a physical gold ETC you receive exposure to the price of gold without having to store physical gold. Furthermore, you receive the added benefit of liquidity, as you are able to buy and sell your holding on the stock exchange with ease during normal trading hours.
Invest in Gold Funds
You could also invest your money in gold funds. Gold funds are mutual funds that pool together funds from investors to invest in physical gold and in stocks of companies that are involved in gold mining, gold exploration, gold processing or gold dealing. Gold funds will give you a more diversified exposure to gold, than buying physical gold or gold ETCs, as it is not purely an investment in gold.
There are various ways in which you can invest in gold and use it as a store of value during difficult market conditions. The price of gold, just like that of any other asset, increases and decreases, but most experts agree that gold will always have value and you will never ‘lose all your money’ by investing in gold.
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