Investing in gold? Must keep these point in mind


After a much worrisome lull return rate for the past 3 years, gold investments are weighing heavy on the profit side presently. As per Value Research which is a mutual fund research and tracking system, gold is banking heavy on the returns side with over 15 percent in gains since the last one year. For the short term investment as well, the return rate has been way above 6.6 to 8.3 percent for one to three months period. It had an amazing run during the global economic meltdown of 2008 and then later experienced some bumpy rides during the past three years. It is currently back on the revive with a mix of various global uncertainties like Brexit, the future of European Union, Donald Trump’s Presidency in the US among other. That is why gold is running high once again as the precariously cautious investor is banking heavy on safer investment modes like this precious yellow metal.

Financial pundits predict golden days for the yellow metal of choice for investors as it is gaining more attention and cash due to its status of being a safe haven. So, if you want to join this investment trend and grab some gold to load some profits then there are a few points about this metal that you must keep in mind.

Consider gold as a hedge and not as an investment:

Is this a shocker for you? Then you might consider rethinking your investment strategies as many successful investors treat gold as a hedge or an insurance premium rather than an active investment. Their view is that gold has no similarity with other types of mainstream investments like bonds or stocks. For instance when one owns a stock of a company it is like owning a part of the company itself which is engaged in a business. And a bond pays you interests, but gold is a commodity that has its prices go up and down based purely on demand for the metal. Also gold has the quality to offer exceptional returns when investor sentiment goes bleak and other markets are out and down. But one must know that such phases do not last long. Many critics are also of the view that people often do not consider the annualized returns that are offered by gold as they simply compare the rates at different points.

Investing in gold will not diversify it at all:

While many investment experts ask their clients to invest into gold for diversifying their portfolio, but many are against this practice. This strategy will actually be counterproductive to investors and may take a toll on their corpus of the size small to medium in terms of the long run. Also their portfolio does not make higher returns as they bank on low offering asset class.

Limit your exposure to gold:

Most financial analysts suggest their clients, even the wealthiest ones to limit their exposure to about 5 to 10 percent. Gold ETFs are notoriously known to offer negative returns and have not fared well in the previous years of 2015 and 2014.

A few extra points to keep in mind:

  • While the gold ETFs have not seen any major jumps in their inflows so far but the buzz around gold being an attractive investment right now will definitely make a positive stir in the market and are likely to see good days in the future.
  • Also buillion experts suggest that gold is likely to get renewed interest in the coming months due to global uncertain situation.
  • And for those interested in the bull wave be wary as it is not easy to get in or get out from any bull run presently. So, the yellow metal may be worth your attention.

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