Gold stocks have seen a 27 percent rise since 2001. While some investors have enjoyed high profits some wonder if it’s still a good investment.
In simple terms, the demand for gold outstrips its supply. On average, 2500 metric tonnes of gold is dug every year yet there’s no sign of the demand decreasing as it stands at 5000 tonnes per year.
The sixty percent difference between demand and supply ensures the price of gold remains high. In some countries, this percentage can even rise to a hundred percent due to extremely high requirements. These include China and India, the two largest buyers of the shiny metal.
Western countries sell most of their gold, but even this supply hasn’t been able to prevent the yellow metal from skyrocketing, creating new records during the pandemic. While prices have now started to settle down, experts believe they will increase once things settle down.
The rise in gold will continue as long as we don’t see drastic selling of gold reserves by countries.
Investing in gold has many dimensions; there are stock options, derivatives or just gold itself. Gold stocks can be risky as the stock market is highly unpredictable. Prices may rise or fall without a warning.
The company you invest in matters a lot, and so does its reputation in the market, including management processes, speculation, and public outlook. Be careful as one wrong decision can cost you a lot.
Investing in stocks requires considering the tax requirements, something which doesn’t occur when you buy actual gold. Buying physical gold also feels more secure as it is in hand, and you can safely store it without any tax hassles.
If you are looking to invest in gold then consider gold coins. They’re readily available and pretty affordable. While stocks have some perks, they might not be the best option for gold investors.