Investing in Gold is often viewed as a safe haven in troubled times .
The price of gold rose almost 20% in 2019.
During 2020 we have seen big rises in Gold prices as the spread of coronavirus fuelled demand for safe-haven assets.
Gold hit a 20 year high in July 2020 . ($2036 per Ounce) but has dropped back to around $1800 in recent weeks.
In general, the US dollar and gold prices have an inverse relationship. When the dollar is falling in value, gold prices tend to increase because it becomes cheaper to buy in other currencies. The demand for gold then increases and thus the price.
Gold prices tend to decrease when the dollar appreciates in value, as it becomes more expensive for foreign investors.
Interest rates also can have an effect on the price of gold . When rates rise it makes other forms of investment more attractive than gold and can result in gold prices falling.
When interest rates fall – it can have the opposite effect and gold prices can rise.
Gold should be seen as a long term investment, as a means of providing some protection from an unpredictable economic environment, rather than a mechanism for short-term gains. Many advisers recommend having 10% to 15% of a balanced portfolio held in Gold .
How to Invest in Gold
One of the simplest ways for first-time investors to make a low-cost gold purchase is to buy by the gram . Because you own grams of a bullion bar and not necessarily the whole bar you cannot have it delivered -so it is stored in a bullion vault. You can sell your gold grams at any time (less some fees) so it is instantly accessible. There are several companies offering to sell gold in Ireland – just Google “Buy Gold in Ireland” to find a few.
It is possible to invest in Gold and other metals and commodities on Revolut. You can invest from as little as $1 Dollar to get started. Only Premium and Metal account holders can trade Gold. You won’t ever get to see the actual gold – but Revolut say that your investment is backed by physical gold.
Revolut’s rate is derived from the Gold (XAU) market rate plus a small markup, which is currently 0.25% during market hours and 1% during out of market hours.
You can indirectly invest in gold by buying shares of gold mining companies. The value of gold mining shares will typically fluctuate up and down, closely following the price of gold.
Some examples of gold mining companies are Centamin, Fresnillo, Randgold Resource, Barrick Gold and SSR Mining .
As with any investment in shares – there is a risk of loss.
One of the cheapest ways to buy these shares in Ireland is through the online stockbroker DEGIRO .
See our comparison of share dealing costs and read more about How to Invest in Shares in Ireland
Exchange-traded funds (ETFs)
Gold ETFs are gold securities that are traded on Stock Exchanges and you can buy and sell shares in them. They essentially track the gold price and can be traded daily through a stockbroker.
ETFs give investors a chance to own small amounts of many different investments within a single fund, letting them get diversified exposure to gold without having to invest huge sums of money. As with any other shares or ETFs – there is a risk of loss.
Some examples of gold-related ETFs are : Wisdom Tree Physical Gold ; ETFS PHYSICALGOLD ; GOLD BULL.SECS 04/UND DZ
Manufacturing costs and the jewellers’ markup mean that jewellery usually sells for a fraction of the purchase price for the first few years of ownership. It should not really be considered as a serious gold investment. Security is also an issue.
The price or value of commodities such as gold can rapidly increase or decrease at any time. The risk of loss in exposure to commodities can be substantial. Investment in Gold will not be covered by any bank guarantee.