Should you invest your money in gold?

We look at the positives and negatives
Should you invest your money in gold?
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Team shortlist11 Jul 2017 AT 10:04 AM
Team shortlist11 Jul 2017 AT 10:04 AM

The price of gold has slipped even further over the last few days, and forecasts seem to point towards a further slump. As the bullion is weak, it’s a great time to buy that fancy piece of jewellery you’ve had your eye on at Gold and Diamond Park… but how about investing in gold?

The price of 24K gold dipped to $1,210.11 US per ounce on Monday morning, the lowest it has been since March this year. Much of the decline is due to the unexpected result of data from the Labour Department in the US, which saw that the American economy generated an additional 222,000 jobs in June.

The strong dollar is expected to put further pressure on the price of gold, along with rising Treasury yields.

The positives

The market price of gold has increased by over 300% since 1934, when it was $35 per ounce in the US.

Also, it’s generally accepted that diversifying your investment portfolio is a wise move – for example, if the stock market falls, it doesn’t necessarily mean that the value of gold will fall, and vice versa.

Moreover, the gold price generally strengthens when the US dollar weakens, which is why it’s sometimes referred to as a “safe haven”.

The negatives

Unfortunately all that glitters is not gold. While it may seem tempting to pop out to your local jeweller and buy as many bars as you can carry, it’s important to remember that this is an unpredictable investment, and the prices can vary hugely within hours. Even if you look at the price of gold throughout 2016, you’ll see that it spiked in June before dramatically falling in November and December.

Also, if you are investing in physical gold such as gold bars, jewellery or bullion coins, you need to have somewhere suitable to store them (such as a safe) and make sure that you have the correct insurance.

Having said that, over time gold has proven to be one of the safest commodities for investors. Like all investments, it just comes down to whether you’re prepared to take a bit of a risk, and weather the storm if prices fall.

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