During the throes of the pandemic, the economy has become an uncertain place for the best of us. Inflation is literally reaching very high proportions and, with bank interest rates at historic lows, where is the investor going? There is an asset whose shine never seems to go away, although it may lose some of its shine from time to time. A number of investors in the digital age consider gold to be the surest hedge against unpredictable circumstances. In addition, with the highest degree of liquidity in current investment channels, gold is the reference investment channel.
Gold funds are a good way to distribute your assets and provide security, since you are investing in gold in a different way than physically. Investing in the shares of companies that extract, refine and trade gold is a much simpler proposition than buying physical gold. If you're concerned about inflation and other calamities, gold can offer you a safe haven for investing. Investing in physical gold can be a challenge for investors who are more used to trading stocks and bonds online.
Depending on your preferences and ability to assume risk, you can choose to invest in physical gold, gold stocks, gold ETFs and mutual funds or speculative futures and options contracts. However, mutual fund managers and advisors consider that investors cannot trace portfolio allocations to gold in multi-asset allocation funds. Nowadays there are several ways to invest in gold, and these are far from the normal physical form that most Indians are used to. Investing in gold ETFs and mutual funds can expose you to the long-term stability of gold while offering more liquidity than physical gold and more diversification than individual gold stocks.
The most common gold coins weigh one or two ounces, although half-ounce and quarter-ounce coins are also available. However, keep in mind that gold company stocks are correlated with gold prices, but they are also based on fundamentals related to each company's current profitability and expenses. You can also choose to buy gold that you can use or that someone once used but that has been damaged in the form of gold jewelry. Due to the high price of gold bars, it is especially important to go to an accredited dealer and pay for the delivery with insurance or to fork out for storage in a large vault or safe.
The SPDR Gold Shares (GLD) ETF, for example, contains physical gold and deposit receipts, and its price follows the price of physical bullion. Just remember that, like gold stocks, you don't buy gold, only paper that is theoretically backed by the debt or equity of mining companies or physical ingot futures and options contracts. Gold bars come in bars ranging from a few grams to 400 ounces, but are usually available in one- and 10-ounce bars. The VanEck Vectors Gold Miners (GDX) ETF, on the other hand, is a passively managed fund that tracks an underlying basket of stocks of gold mining and refining companies.