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Is Gold a Good Investment?

Investment demand for gold bars and coins has seen a fast and consistent increase in the past five years. Specifically, investors are seeking ways to move their savings and investments away from the banks and towards a more stable and potentially profitable, physical asset, and gold seems to fit the bill. 

Once thought of as solely large gold bars stored in cavernous bank vaults, gold bullion now comes in a wide range of sizes and values that make it possible for even hobby collectors to invest. The rising popularity of gold coins has also helped to encourage more investors into gold trading by providing an opportunity for split asset sales and smaller buy-ins.

Current Gold Demand

Although often considered one of the most stable investment assets, gold has seen a notable fall following the announcement that Donald Trump will replace Barack Obama as President of the United States. There are certainly other market factors at play, but the fact remains that since the US Election Day, gold prices have fallen by more than 11 per cent. The drop in prices is proving attractive to investors who are keen to buy in at a lower entry point.

According to Philip Diehl, the 35th Director of the US Mint and president of the US Money Reserve, gold has proven time and again that it is the strongest asset during both political and economic turmoil. There is speculation that the precious metal will remain strong in the years to come, particularly given the uncertainty regarding the policies of President-Elect Trump. 

Advantages and Disadvantages of Gold Investment

One of the main advantages of investing in gold is the option to buy the physical asset and hold it in your own hands. When you own physical gold, there is no need to rely on another party to keep promises or remain in business. Physical gold is also easy to buy and sell, and so reduces the risk that you may miss out on price highs due to lack of interest. 

Although some coins remain more popular than others, experts suggest that simply avoiding rare and unusual bullion is enough to ensure ease of selling. However, for those open to a little more risk, the potential profits of rare gold bullion coins, while potentially harder to realise, can be very attractive. 

One disadvantage of gold investment is the price of production and transport. As a physical asset, it’s important to ensure it is produced to the highest quality and transported safely, and these processes cost money that can add to the final purchase price. However, this additional investment in safekeeping is largely seen as acceptable when it comes to mid- and long-term investments.

Is Gold a Good Investment Right Now?

There’s no certainty in the investment world, but all things considered, the current levels of global political uncertainty mean that gold - if it follows previous trends - looks like a good investment in both the mid and long term. 

Political and economic turmoil tends to be a factor that pushes up the price of gold as investors seek safe havens in an unstable market. Although we cannot predict exactly how precious metal prices will fare in the coming years, this factor alone increases the likelihood of gold being a good investment.

To learn more about the pros and cons of gold investment, contact our sales team today on 0121 523 1047.