Diamonds are forever or is that Goldfinger!?
Is gold forever
Recent market nervousness often is a trigger for investors to think about diversification or increasing exposure in gold, precious metals and other esoteric (and alternative) investments.
There is good reason for this as these assets can often act as safe havens, meaning they can help you diversify your portfolio.
With this year’s (2017) election mess and last year’s Brexit vote, market volatility and the US presidential election, it’s not a surprise that investors have worried.
So expectations for positive gold flows, looks good.
Another reason for increased flows into gold and alternatives like precious metals is likely because there are now more ways in which investors can access these investments. It’s not just about buying gold in physical form such as bars and coins, but you can now get exposure through gold ETFs (exchange traded funds) that are listed on a stock exchange.
The general public investors are now looking at the availability of more traditional type of gold based savings/investment plans and on-line platforms are increasingly trading vault based gold acquisition.
Certainly the ETF market is making access to gold a much more general investment than ever before.
Precious metal assets generally do best when there is economic and or political uncertainty. Certainly we are seeing this currently post general election.
…and of course we are slowly seeing the creeping rise of inflation….
A few reasons why gold may not be a good investment for you
Unlike a bond, the metal pays no interest. There is no dividend. It may not protect you against the worst forms of inflation.
This does describe most investments. But at least if you invest in major stocks, although there is no guarantee, you are likely to receive dividend payments, you won’t if you buy gold bullion or coins.
Generally gold’s value, fundamentally is based on fear. It’s bought as a hedge when things are getting wobbly and since 2008 (until more recently) gold has been a poor investment.
And ofcourse there are a few gold scams and “buy-now” out there to be very wary about….
So be careful, these type of investments such as gold can quite easily turn nasty on you quickly. Long, long term though, not a bad thing to think about having as part of a portfolio maybe or a quick ish win at the right time of uncertainty.
If worst comes to the worst they make nice rings 🙂 Personally, I prefer silver as jewellery but that’s another matter.