01 Feb 2017 AT 12:30 PM

Is now the right time to invest in gold?

As the market value rises, we look at the positives and negatives
01 Feb 2017 AT 12:30 PM
Is now the right time to invest in gold?

We’re all advised to save money for the future, but for many the issue of how to save for the future is quite difficult. Stocks and shares? Property? Government bonds? Or even just a simple savings account?

Many who have chosen to invest in gold have seen the retail price in Dubai rise 5 percent per gram since December, leading it to look like an attractive investment option.

This morning, 24K gold was priced at AED147 per gram in Dubai, which is an increase of 4.48 percent since the beginning of the month. As the price rises, and people remain wary of the world's volatile political landscape affecting the stock market, many are asking whether now could be the right time to buy some yellow bars.

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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