Gold, which has played an important role in the economies of many countries from past to present, is still a very robust, highly reliable and long-term investment.
Yellow metal gold, a universal currency for hundreds of years, was used as a world reserve currency for a long time due to its universally accepted universal value.
Upon the signing of the Bretton Woods Agreement in 1944, the US dollar replaced gold as the world’s reserve currency. Even after this agreement, however, several countries continued to use gold to support local currencies.
Today, gold, which investors call a “safe harbor hala, is still preferred as a robust, reliable and long-term investment in almost all circumstances. Moreover, there are many different ways to invest in gold today.
Advantages of Investing in Gold
Although it is not a primary currency in the developed world today, gold continues to be an advantageous and popular investment for various reasons. Here are the advantages of investing in gold:
1.İt is universal
It is one of the biggest advantages of investing under the universality that can be important for every investor. Because gold can easily be converted to any currency anywhere in the world without losing its value. This universal feature makes the gold unique.
2.Retains Value
Gold continues to maintain its value over time. In fact, economists argue that even the price of gold is not an indication of its value. That is, even if the price of gold falls, the underlying value does not change much and gold retains its value over time.
3.Protects Against Inflation
Inflation in economies increases economic uncertainty and increases uncertainty. Gold reacts rapidly to changes in inflation rate and becomes more preferable than other investment alternatives. This is because it provides a more stable investment opportunity during periods of inflation than gold cash or the stock market.
4.Earns from Dollar Value Increase
Since gold is priced in US dollars, the increase in the value of the dollar positively affects the earnings of Turkish investors. For example, gold is dependent on both its own value and the dollar, which is why Turkish investors gain with the increase in both the gold and the dollar.
5.Suitable for Diversifying Portfolio
Adding different securities and assets to the portfolio is an indispensable way to diversify investments and reduce risks in general. As gold often moves in the opposite direction from the stock market and the currency, it becomes one of the most suitable alternatives to diversify the portfolio.
6.There Is Always A Strong Global Demand
As gold is used in the manufacture of various products such as jewelery, jewelry or electronics, there is a reliable demand that keeps prices steady. On the other hand, if the current demand increases further, it becomes possible for these markets to raise the prices of gold further.
Disadvantages of Investing in Gold
Although gold is a very advantageous investment for various reasons mentioned above, it is in your best interest to know its disadvantages before investing. Here are the disadvantages of investing in gold:
1.Does Not Provide Cash Flow
Other investments, such as stocks and bonds, may derive part of their value in the form of dividends and interest and provide cash flow. However, the only possible return on gold can be obtained at the time when it is decided to sell when value increases.
2.Can Create a Balloon
In turbulent economies where instability and uncertainty are intense, many people start investing in gold, but when investors start to panic, gold can become much more expensive than it should be. This means that your investment will lose value after price corrects itself. However, long-term investment targets also make it possible to avoid such risks.
3.Requires Extra Security
If you choose to buy physical gold among the ways of investing in gold, you may need to take extra security considerations. These include storage and insurance costs. Because if gold is damaged or stolen, compensation for losses is not always possible.
When to Invest Gold?
Many questions, such as when to invest in gold, when gold prices will rise or when gold should be invested, are intrigued by investors.
The best time to invest in gold is when inflation begins to bring down the value of the national currency. The earlier you detect such decreases, the more profit you may make from your gold investment.
Leading indicators, such as stock market declines or political turmoil, for example, may point to future depreciation of a country’s currency. Stock market declines and political turmoil often lead investors to alternatives such as gold. This results in higher gold prices.
On the other hand, developments such as the steps announced by the central bank to print more money may be the best time to invest in gold.
If the country’s currency is strong and inflation is not expected, there will be little reason to raise gold prices. However, if there are growing demand expectations in markets that require the use of gold, such as goldsmiths and electronics, you may consider investing in gold to take advantage of potential price pressure.
Generally speaking, the long-term take-and-hold strategy can be the best approach for you as well as the appropriate approach for every gold trader. You can always buy when the price of gold drops. This way, you don’t have to worry about buying while others are buying and the price is increasing.
How to Invest in Gold?
There are many different ways you can invest in gold. We have listed some of the most popular options that are preferred by gold investors and are as follows:
1.Direct Physical Purchase
You can buy gold directly from bullion or gram, quarter, republic gold from jewelers or exchange offices. You can feel safer and more comfortable because you have the physical physique, but you need to be careful about theft and disappearance.
Theft or loss problems are among the biggest disadvantages of physical gold. But of course, if you don’t have any storage problems and you’ve taken additional care, such as insurances, you’ll be able to avoid these problems.
2.Direct Purchase from Banks
You can get your gold directly from your bank by opening a gold account from a preferred bank. Banks sell gold in grams, but they also offer options such as a quarter or full and allow you to buy enough grams of gold.
It is advantageous to open a gold account and buy gold from banks. You will not face problems such as theft or loss. You can also buy gold from banks to match the amount you want. For example, you can only buy 30 grams of gold to correspond to 30 pounds or 60 pounds.
In addition, the deposit accounts opened in all domestic and foreign banks in our country are under state guarantee up to TL 100.000. This includes gold deposit accounts as deposits.
If you need help with which bank to open a gold account, you can check out our article on advantageous gold accounts and find the best bank for you.
3.Gold Mutual Funds
You can also invest in gold with the mutual funds option. Gold funds invest in capital market instruments mainly based on gold and gold. You can find many gold funds to suit your needs, and you can receive shares of your preferred fund from your bank in the amount or quantity you specify.
If you choose to invest in gold through gold funds, you need to pay attention to the content of the fund you want to share. These types of funds can invest in capital market instruments based on gold and / or gold. On the other hand, it is in your interest to take into consideration the fund management fees in the decision making process.
If you intend to step into the world of funds to invest in gold, you can easily learn almost everything you need to know in a few minutes thanks to the mutual funds guide.
4.Stocks
As an alternative to investing in gold, you can buy stocks of gold producing companies from the stock exchange. The value of the shares you buy will be strongly related to the value of the gold. In addition, dividends can be paid for your shares.
5.Gold Futures Contracts
Gram gold can be traded as derivative instruments in the Futures and Options Market (VIOP) under Borsa Istanbul. You can also invest in gold using this path.
If you expect that the gram gold value will increase, the long position (buying) is appropriate. On the other hand, if you expect the price of gold to fall, the short position (sale) will be appropriate. Like other derivatives, gold options and futures are risky; you should not forget that there is a possibility that you will get high returns or suffer huge losses.
What Should Be Considered When Investing in Gold?
You can make your investment more profitable and secure by paying attention to some important points while investing in gold. Within this framework, there are three points you should pay attention to when investing in gold.
1.Price difference
Perhaps the most critical point to consider when investing in gold is the price difference between buying and selling. This difference will significantly affect the profitability of your investment. Therefore, you need to get your gold as cheap as possible.
One of the factors affecting the price difference between buying and selling in gold is labor cost. Labor cost, quarter, half, full gold or bracelets may have higher prices than the normal value of gold. For this reason, it is in your interest to choose gram golds that do not have labor costs for your investment.
2.Timing
Gold prices fluctuate in line with certain factors. The price can sometimes go down and rise. You may be able to buy or sell at the right time, knowing a number of factors that affect gold prices, such as inflation, economic instability, and global turmoil.
In the article Factors affecting gold prices, you can find basic information about why gold prices fluctuate or what can cause price changes. So you can be more prepared for everything on your journey to investment in gold.
3.Theft and Disappearance
If you do not prefer to buy grams of gold from banks, or if you do not intend to keep your gold in safe places, such as bank safes, you should take security measures against theft and loss.
To protect against theft and loss, you can keep your gold safely or insure your gold by taking out theft insurance. You should keep in mind that this may not always be compensated if gold is stolen or lost.