This brings us to a pertinent question: Can investments in gold be a wise decision in light of the risks and uncertainties currently facing the markets?
Gold as an Investment
The trends of the gold market are often compared to those of stock markets. Gold is seen as a tool for "preserving" value, while stocks and bonds are regarded as instruments for "generating" value. Stocks and bonds generally perform better in conditions of political stability and a lower degree of external shocks. This is particularly evident when analyzing the American market, where stock exchanges have consistently benefited from significant political stability since the 19th century. Economist Thomas Sowell points out, for instance, that one dollar invested in American bonds in 1801 would be worth over half a million dollars by 2004.
However, while this indicates that gold may not be the best option for long-term investments, the fact remains that gold investments can serve as an excellent refuge during times of uncertainty. Additionally, the price of gold continues to exhibit significant volatility in the medium term, and this volatility can, therefore, be leveraged for profit by selling at a higher price than the purchase price. In short, investing in gold can be lucrative when approached correctly.
How to Invest in Gold
To invest in gold, one does not need to be a "professional trader"; today, there are various straightforward tools available that cater even to casual investors. However, it is crucial to understand how to invest in gold, grasp the fundamentals of trading, and choose the right broker for transactions (usually online).
Once the "technical" aspects of trading are understood, it is time to make predictions regarding market trends, where a shortage of the yellow metal could signal a long-term upward trend. This is due to the fact that the global supply of gold is limited, as extracting it becomes increasingly challenging and expensive. Demand significantly exceeds supply not only due to gold's status as an investment and a material for jewelry but also because it is a critical resource for many industries.
How Much to Invest
Investing in gold, like all investments in general, carries elements of risk. Therefore, it is essential to invest with this in mind, thereby limiting the capital allocated for investment. In other words, there is no need to make risky investments with savings required for planned expenditures.
