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Gold’s price has been on an upward trajectory since the start of the year, enticing new investors to seek out the shiny metal. And, this week, gold prices have been flirting with new record highs, reaching $2,438.14 per ounce on July 16. That’s just under the most recent high of $2,439.98 per ounce from late May and marks a significant increase from late last year when prices were below $2,000 per ounce.
At first glance, investing in gold at elevated prices might seem counterintuitive, but several compelling factors aside from the price are driving investors to capitalize on this golden opportunity. For starters, global economic uncertainties, geopolitical tensions and concerns about inflation have reinforced gold’s status as a safe-haven asset. And, the potential for further price appreciation, coupled with gold’s role as a portfolio diversifier, adds to the allure.
While the benefits of gold investing are undeniable in the current economic climate, it’s crucial to recognize that not all gold assets are created equal. Gold offers a diverse array of investing options, each with its own risk-reward profile. As such, it’s important to carefully consider which gold assets present the most promising opportunities, especially given the current price trajectory.
Learn more about the best gold investing options available to you here.
What gold assets are a smart bet with gold prices climbing?
Some of the gold assets that could prove to be smart bets in this high-price environment include:
Gold exchange-traded funds
Gold exchange-traded funds (ETFs) offer a convenient and cost-effective way to gain exposure to gold prices without the need to physically own and store the metal. These funds typically track the price of gold and can be easily bought and sold on stock exchanges. With gold prices climbing, ETFs could provide attractive returns while offering high liquidity and lower storage costs compared to physical gold.
Find out more about how gold investing could benefit your portfolio now.
Gold mining stocks
Investing in shares of gold mining companies is another option worth considering, as it can offer leveraged exposure to gold prices. And, as gold prices rise, gold mining companies tend to see their profits increase at a faster rate, potentially leading to higher stock prices. If you want to take this route, the large, established miners could be relatively safer bets, while junior miners might offer higher growth potential but with increased risk.
1-ounce gold bars
If you want to invest in physical gold, 1-ounce gold bars offer a popular compromise between larger bullion bars and smaller coins. One of the big draws of these bars is that they provide a convenient and internationally recognized form of physical gold investment. They’re small enough to be easily stored and transported, yet large enough to minimize the premium over spot price compared to smaller denominations.
And, with gold prices climbing, these bars could be an attractive option if you’re seeking a tangible gold asset without the higher premiums associated with coins or the storage challenges of larger bars. However, it’s important to ensure that you purchase from reputable dealers if you’re going to buy 1-ounce gold bars, as counterfeit gold bars can be an issue. And, like all physical gold investments, secure storage and insurance should be considered in the overall cost calculation.
Gold futures and options
If you’re a more seasoned investor, gold futures and options contracts provide an opportunity to profit from gold price movements without owning the physical metal. These derivatives allow for leveraged positions and can be used for both speculation and hedging purposes. However, these assets also come with higher risks and require a deep understanding of complex financial instruments, so make sure you fully understand how to navigate the landscape before buying in.
Gold mutual funds
Gold mutual funds may also be worth considering in today’s investing landscape. When you put money in gold mutual funds, you’re investing in a diversified portfolio of gold-related assets, which may include physical gold, mining stocks and other gold-linked securities. These funds are professionally managed and also offer diversification within the gold sector, reducing some of the risk that can come with the individual assets within the fund.
Gold mining ETFs
For those interested in the mining sector but also want to seek diversification, gold mining ETFs offer exposure to a basket of gold mining stocks. By putting money into a gold mining ETF, you can potentially benefit from rising gold prices while spreading risk across multiple companies, making this type of gold asset worth a look.
The bottom line
With gold prices on an upward trajectory, these assets present various avenues to participate in the gold market. However, it’s essential to remember that each option comes with its own set of risks and considerations. Factors such as storage costs, liquidity needs, risk tolerance and investment horizon should all play a role in determining the most suitable gold assetsto add to your portfolio. So, be sure to do your research and make sure that your investing goals align with the assets you’re considering.
