Gold remains the perennial safe haven. The price of gold has risen about 10% since the beginning of the year, compared to a return of about 4% for Bitcoin.
Recent developments, such as the US-China trade war and threats of new tariffs, have further strengthened its position as a safe haven, driving the price of the yellow metal to a new historical record in the region of $ 3,000 per ounce.
In January 2024, the price of gold reached 2,035 and last April exceeded the levels of $ 2,350 and at the end of last August to $ 2,540 per ounce, as there was optimism that the Fed was getting closer to reducing interest rates, as higher interest rates usually work negatively for gold. Lower borrowing costs generally favor gold, which pays no interest and is pressured when the Fed’s interest rates are high. The looming trade war has further boosted the price of gold towards the $3,000 mark.
An indication of the investment climate for gold is the following event where planes carrying 151 tons of gold “flew” from London to the United States.
The amount of gold stored in London’s vaults fell by 4.9 million ounces in January, as traders rushed to transport the precious metal to the United States to avoid tariffs and take advantage of higher prices.
London is the world’s largest gold trading hub, with around $800 billion worth of the precious metal sitting in vaults in the British capital. But concerns that President Trump will impose tariffs that will affect gold pushed U.S. prices above London’s last month, offering a lucrative “arbitrage” opportunity for those who could airlift their holdings across the Atlantic.
If you want to get your hands on gold, there are many ways you can invest:
1. One way to invest in gold is to buy physical gold.
For example, by purchasing gold bullion (in the form of bars, ingots, or coins) or jewelry.
2. A second way is to buy gold pounds.
In mid-January, the price of the gold pound broke the 700 euro barrier, recording a still historical record and continued to rise up to 740 euros. At the same time, the purchase price is at 633 euros with the spread between the purchase and sale price exceeding 100 euros, a spread “prohibitive” for investing in the precious metal, at least in its physical form.
3. You can also invest in shares of gold mining companies.
This is a more indirect way to invest in gold, as you don’t personally own the gold. The value of gold mining shares usually rises and falls, closely following the price of gold. However, there can be price fluctuations and additional considerations, such as the company’s financials or other issues related to mining. If you invest in physical gold, the only income you receive from gold is profits if gold prices rise above the market price. However, some gold mining stocks, for example, pay dividends, so passive income is possible.
4. There are also many gold exchange-traded funds (ETFs).
Some gold ETFs focus on aspects of gold as a commodity, such as price fluctuations. Others will invest in companies in the gold industry. With gold ETFs, you don’t own the physical commodity, but rather small amounts of gold-related assets within a single share.
5. Another popular way to invest in gold is through gold futures or other leveraged products, where the underlying asset is gold.
Futures and leveraged products are complex instruments and can carry a high risk of losing your investment or more. They are a form of investment for professionals rather than for ordinary investors.
Factors that affect the price of gold
Uncertainties, political, geopolitical, economic, favor gold as it is considered a safe haven asset, that is, investments that are expected to maintain or increase their value in periods of instability and market downturns. Gold also strengthens in periods of high inflation such as those of recent years.
Historically, gold has had a negative correlation with stocks and other financial instruments, but in recent years this rule is not… observed.
There is generally an inverse relationship between gold prices and the dollar. When the value of the dollar decreases, gold prices tend to increase. On the other hand, when the dollar increases in value, gold prices tend to decrease.
