Gold has surged to record-breaking levels in 2024, with prices rising over 30% to an all-time high of $2,748.23.
This increase stems from a combination of factors: the Federal Reserve's recent interest rate cut, global geopolitical tensions, and uncertainty surrounding the U.S. presidential election.
A shift away from the U.S. dollar by central banks in countries like China, India, and Turkey, along with retail giant Costco’s addition of 1-ounce bullion bars, has further spurred demand.
Investors are drawn to gold in times of economic instability, seeing it as a hedge against inflation and currency volatility. According to Joseph Cavatoni, senior market strategist for the World Gold Council, gold tends to perform well in periods of market stress, exemplified by the 101% jump in gold prices from 2008 to 2012 during the financial crisis.
Considerations for Investing in Gold
1. Investment Objectives: New investors should first clarify their goals. Gold can diversify a portfolio or serve as a protective “safe-haven” asset.
2. Forms of Gold Investment: Gold can be purchased as physical bullion, or through financial products like gold-backed exchange-traded funds (ETFs). Physical gold requires careful handling, storage, and safekeeping. ETFs, however, operate similarly to stocks and avoid storage concerns.
3. Understanding Premiums: Physical gold, like jewelry, may have premiums based on design or collectible value, which can drive up costs beyond the spot price of gold. Buyers should confirm that the premium aligns with their goals, particularly if the piece has artistic or collectible elements.
4. Selling Strategy: Investors should have a clear plan for selling gold when the time comes. Cavatoni suggests working with a trusted partner to facilitate a smooth sale and help manage any transaction costs or timing challenges.
Cavatoni also cautions investors to avoid rushing into purchases and to be wary of any deals that seem “too good to be true.” With accessible options like gold-backed ETFs available for new investors, he advises prudent research to ensure their chosen investment aligns with long-term financial goals.
Source:
CNN
Image:
CTV News
