Tuesday, September 29, 2020

How to invest in gold: the options to make money now that it is setting records

 

The gold shines like never before in the investment portfolios. The precious metal, an asset 'refuge' for investors in times of uncertainty in the markets, continues with a firm step and skyrocketing in price. This Friday it touched new all-time highs and is already in sight of $ 2,100 after surpassing the psychological level of $ 2,000 last Tuesday. Most experts defend that this rally has been produced by the appearance of several factors: the weakness of the dollar, the real negative yields of fixed income, the uncertainty about the economic recovery after the coronavirus cases spiked around the world and the possibility of the 'trade war' between the US and China escalating regal assets.

 

The price of gold would not have 'vertigo' and its good behavior could continue in the coming months. Jack Janasiewicz, manager of Natixis, notes that "investors are turning to other means of offsetting equity risk than sovereign bonds and gold is one of the options. So, until one of the big catalysts don't decline, it's hard to see any significant pressure on the history of gold. “Along the same lines is Steven Dunn, head of ETFs at Aberdeen Standard Investments, who emphasizes that “it does not seem likely that the factors that add uncertainty in the markets will dissipate in the short term. So, as investors grapple with volatility, the appeal of safe haven assets like gold and silver will only increase. "

 

With these promising prospects, the big question investors are asking is: how can I invest in gold? The possibilities are varied and all of them benefit from the march experienced by the price of the precious metal to a greater or lesser extent. The first thing that would come to mind would be the purchase of physical gold from an official dealer (to avoid possible tricks of authenticity). This possibility only has one 'but' and that is that we will have to pay a certain premium. The reason? That the purchase price will always be higher than the price of gold due to the costs of the operation and, in the case of significant purchases, a custody in a safe to keep our investment safe.

 

This premium for the purchase of physical gold will vary depending on the amount invested (the higher the investment, the lower the commission) but would be between 1.5% and 3%. This percentage is perfectly acceptable if we make a long-term investment. In fact, this cost will have already been 'covered' by those who have decided to take positions in the last twelve months since the gold rally has been 35%.

 

If we don't want to buy physical gold, we have the option of turning to the financial markets and taking positions in an exchange-traded fund (ETF) that invests in precious metals. In fact, silver is also going through the same good time as good as it has soared more than 65% and is not yet trading at all-time highs. This route offers multiple options so we must consult with our manager or see what products our broker offers. Some of the options are the Amundi Physical Gold, the Invesco Physical Gold or the Wisdom Tree Gold, which soar by around 28% this year.

 

Another option is the possibility of taking shares in an investment fund that has a large percentage of the portfolio invested in gold or silver miners. This option is closely related to the price of the precious metal, although it can differ (for better or worse) depending on the behavior and performance of the companies themselves. The best options, according to the Morningstar ranking, are the Ninety One Global Strategy Fund - Global Gold Fund, the Schroder International Selection Fund Global Gold, the DWS Invest Gold and Precious Metals Equities or the BlackRock Global Funds - World Gold Fund. The increases in this category range from 25% to more than 50% during this year.

 

Another option if we decide not to make the physical purchase and not take positions in ETFs or mutual funds is to invest in certain mining companies that are listed on the stock market. Here, the variety is very wide and some of those that are most repeated in the funds' portfolios are Newmont Goldcorp, Barrick Gold or Aura Minerals. In fact, the former has almost doubled in price since March and is one of the world's largest gold exploiters, operating in the United States and Australia.

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