Gold could reach new peaks again in 2021, according to market experts who expect “a fairly big tick” ahead for precious metal prices.
Prices for gold have been mixed up so far this year. Since the start of the year, spot gold has gained nearly 0.66% – tearing back some gains after a March stagger that saw prices drop below $1,700 per ounce. As we speak, gold is currently traded at around $1,011 an ounce. The current trend is in loud contrast to the situation seen at the beginning of the year when the precious metal was under pressure due to a strong U.S. dollar and peaking U.S. bond yields.
It should be remembered that the price of gold fell in India at the end of 2020 after peaking at a record high last year during the peak of the virus. The good news? Gold prices are mounting again due to favorable macroeconomic fundamentals.
Why Is Gold Booming?
The precious metal is nearly 19% so far in 2021 because lower interest rates and central bank stimulus have jazzed up existing upward momentum for the precious metal.
Because it’s less volatile than other investments, gold is normally seen as a “safe haven” asset in times of uncertainty. Even so, gold moves inversely to the U.S. dollar, meaning that when the dollar moves lower- as it has done recently – gold moves higher.
The recent pandemic downturn, however, has caused this precious metal to enter a new trading territory. According to market specialists, gold is now pulled in two directions: One is uncertainty, but equities are still doing really well.
Prices Expected to Mount
As the pandemic wreaked havoc in markets in late March, our metal also suffered a sell-off as stockholders rushed to free up cash.
Things have changed since then, with buyers returning to gold, seeing it as a safe store for their finances. So far, in 2021, inflows into physical gold-exchange traded funds is around $12 billion according to http://buygoldonline.io/ data.
Recently, Bank of America supported a similar “all-time high” prediction. They claim that flow would be fueled by continued global uncertainty- at least over the next few years.
Is 2021 a Good Year to Buy?
Experienced investors believe the best time to purchase an asset is when it is out of favor and the value has dropped because that way, you can pick it up at a low-price. Then you simply wait for the market to swing back in your favor, scaling up the price.
If you believe that’s a viable strategy, then there could be a good argument for purchasing gold right now.
Gold has been out of favor since its prices ballooned at $2,084 an ounce last August, at the height of COVID-19 uncertainty. It brought to completion its role as a traditional safe haven, skyrocketing in value as investors deserted volatile stock markets.
Last year’s COVID-19 shot breakthrough was good news for stocks as investors flooded back, but bad news for gold stockholders. The reason? The gold price usually rises when stock markets crash, suggesting that it may fail to fulfill its established role of guarding shareholders against growing inflation and falling stock markets this time around.
That only leads us to the conclusion that there’s no good time to buy gold. And, given that you can easily hit $2,000 per ounce by the end of the year, you should consider having some gold in your portfolio.
What’s more, financial advisors recommend a gold allocation of 1% to 5% of a persons’ overall portfolio. They also say that the same allocation could shift higher from 5% to 15%.
Gold remains a small amount of most individuals’ portfolios. However, even an increase of 1% to 2% can have an enormous bearing.
How to Invest in Gold
While this precious metal is one of the world’s earliest forms of currency, there are now multiple ways to store gold for investment purposes. As a matter of fact, if you’re all into buying fever, you should first decide why you want to own gold. Is it the portfolio diversification or the return potential? Then, to better serve the intended purpose, familiarize yourself with the different options and risks involved.
Gold Bullion
When you think about investing in gold, gold bullion is the first thing that comes to mind, but it’s most commonly available as one-and 10-ounce bars. Considering the current gold value is around $1,900 per ounce (as of September last year), this makes spending on gold bullion a decent proposition.
Because of gold bullion’s high price, it’s especially important to use a reputable broker and pay for delivery – with coverage- or to shell out for storage in a safe deposit box or at a large vault.
If you’re all about buying gold bullion, it pays to stay up to date on the price of gold, so you can choose the right time to purchase – most brokers update their prices based on current spot prices.
Buy ETFs/ETCs
Exchange-traded commodities and exchange-traded funds are processes that allow investors to track the original price of gold without having to physically hold the precious material. For those wanting to play the gold price game, the ETF remains a viable option.
Buy Alternatives
Alternative processes such as foreign exchange trades and gold-backed cryptocurrencies offer another bridge to the gold world, though these are typically for more experienced investors.
Benefits of Investing in Gold
- Gold remains the ultimate safe-haven asset.
- It maintains its value over time and the value rises during times of crisis.
- Compared to other financial products, gold offers competitive returns on investment.
While most experienced investors recommend dedicating 10% of a portfolios to gold investments, there’s another way to benefit from the gold’s mounting demand without really investing in the precious material. You can opt for stocks if you see a more accessible entry point with a significantly higher rate of return in comparison to physical gold.
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