Article content
This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.
Here’s how to dabble in the most popular investment of all time
This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.
When the stock market starts looking turbulent, people repeat the old mantra that “cash is king.” But some people want a better haven for their hard-earned funds — and turn to gold.
For thousands of years, the world’s most popular investment was gold: a pretty metal you could melt, cast, bend, bury and reuse endlessly.
These days, you have a lot more investment options; but if nothing but gold will do, here’s how to invest in the metal.
Glevalex / Shutterstock
That depends on who you ask. Some argue commodities like gold and silver are too risky and don’t offer enough utility as investments, while others argue they can help round out a diversified long-term portfolio.
Many people rush to gold in tough times. The shiny metal has been valuable since the dawn of recorded history and tends to hold up well during stock market dips and periods of high inflation.
Famed investor Warren Buffett has been somewhat ambivalent about gold over the years. “I have no views as to where (gold) will be (in the next five years), but the one thing I can tell you is it won’t do anything between now and then except look at you,” he told CNBC in 2009.
Buffett shocked his followers in 2020 when his company Berkshire Hathaway actually picked up shares of gold mining company Barrick Gold — but he sold them the following year.
You have a few options: You can either buy physical gold bars or coins, invest in gold mining company stocks, buy shares in a gold exchange-traded fund (ETF) or buy into gold futures.
eamesBot / Shutterstock
The most straightforward way to put your money in gold is to buy and store gold bars, coins or jewelry.
To actually make a profit off the precious metal, you need to have a reasonable expectation that your gold can be sold for more than you paid for it. Unfortunately, gold prices are difficult to predict.
In the 1990s, gold barely hit US$300 on a good day. But as financial crises loomed in 2007 and 2008, people did what they always do — they started buying up gold and drove up the price.
Its value shot from US$800 an ounce in 2009 to US$1,900 in 2011. But by 2013, gold was down to US$1,300.
Then, in the summer of 2020, pandemic uncertainty briefly pushed gold to an all-time high of US$2,000 an ounce before sinking back down.
TTstudio / Shutterstock
You can invest in gold without ever touching a flake by purchasing shares in gold mining companies. And, if you like to keep your investments in Canada, this country has plenty of firms to choose from.
The advantage here is that if the price of gold falls, mining companies can often shift focus to another metal.
The disadvantage is that mining stocks can decline alongside the rest of the market, even when the price of gold is steady. If stock analysts don’t like a company’s financials, the quality of its management team or future production prospects, investors may punish its stock price.
You can easily buy commodity stocks through any number of investing apps.
Rawpixel.com / Shutterstock
Investors might buy into gold exchange-traded funds (ETFs) to avoid the uncertainty that comes with investing in a particular company.
These funds, which are traded like stocks, pool investor capital and pour it into a variety of gold and mining companies. Some popular gold ETFs in Canada include XGD-T and HGY-T. ZJG-T is also an option if you want to invest in smaller exploration firms.
Although ETFs are diversified to reduce risk, any of these investments are subject to stock market fluctuations. If the market crashes, the value of your investment could drop even if the price of gold doesn’t change.
near / Shutterstock
Gold futures are complicated. They’re contracts in which you agree to buy a set amount of gold at a specific price some time in the future.
Traders can strategically buy and sell futures contracts to profit from the changing price of gold. Buyers of futures contracts profit when commodity prices rise. Sellers of futures contracts profit when commodity prices fall.
The contracts typically require a minimum purchase of 100 ounces of gold. Novice investors should exercise extreme caution with futures contracts due to the high degree of borrowing typically involved.
vetre / Shutterstock
Before you go King Midas and turn your entire portfolio to gold, take the following precautionary steps:
And remember, if you’re just starting out as an investor, it’s not a bad idea to look into some low-stakes alternatives. One popular app lets you invest with just your “spare change.”
This article was created by Wise Publishing. Wise is devoted to providing information that helps readers navigate the complex landscape of personal finance. Wise only partners with brands it trusts and believes may be helpful to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
Lawyer says Chinese doping case handled ‘reasonably’ but calls WADA’s lack of action “curious”
A linebacker at West Virginia State is fatally shot on the eve of a game against his old school
Hall of Famer Joe Schmidt, who helped Detroit Lions win 2 NFL titles, dies at 92
B.C. to scrap consumer carbon tax if federal government drops legal requirement: Eby
Reggie Bush was at his LA-area home when 3 male suspects attempted to break in
RCMP say 3 dead, suspects at large in targeted attack at home in Lloydminster, Sask.
Canada’s Marina Stakusic advances to quarterfinals at Guadalajara Open
Canadanewsmedia news September 12, 2024: Air Canada pilot strike looms, BC transit strike talks resume