All That Glitters is Gold?
Gold prices have been on a record-breaking rise in 2024, climbing over 30% and reaching an all-time high of US$2,748.23. Several factors are fueling this surge, including the U.S. Federal Reserve’s significant half-point interest rate cut, heightened geopolitical tensions, and economic uncertainty surrounding the U.S. presidential election. Further bolstering this rally are actions by central banks in China, India, and Turkey to reduce their reliance on the U.S. dollar, alongside Costco’s decision to offer 1-ounce bullion bars.
Though gold is typically seen as a hedge against inflation, there are essential factors for investors to consider before diving into the gold market. During uncertain times, traders often turn to gold, betting that its value will remain more stable than other assets like stocks, bonds, or currencies if economic conditions worsen.
For new buyers, expert Cavatoni advises first defining your investment goals—whether it’s to diversify your portfolio or secure a safe-haven asset. Next, consider the form of investment: gold-backed exchange-traded funds (ETFs) or physical gold, each with unique considerations. Physical gold, for example, requires secure delivery, storage, and safekeeping. Buyers should also be aware of the markup on bullion compared to the spot price of gold.
“You need to be comfortable with the price level and ensure you’re getting the investment you want, not something that’s more collectible,” Joseph Cavatoni, senior market strategist for the World Gold Council, says.
For those purchasing physical gold, options include banks, reputable retailers, and online platforms. Cavatoni stresses a “round-trip mentality” with physical gold—planning for both the purchase and eventual resale. Factors like gold’s purity and form matter, as items like jewelry can carry premiums for design, adding complexity.
Gold-backed ETFs, however, offer a simpler alternative, freeing investors from storage and purity concerns. “It’s like buying a stock,” says Cavatoni. Many platforms now offer commission-free trades, making it cost-effective to enter and exit.
Above all, Cavatoni urges investors to prioritize caution over speed when buying gold. and that if it sounds too good to be true, it probably is. Take your time and make informed decisions.
***Please remember, this article is not investment advice. It is best to speak with a specialist if you are looking to invest in gold.
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