On Monday, September 29th, the price of gold soared to a new high, nearing $3800. At the same time, investors are waiting for key employment data and clues from Federal Reserve officials regarding the prospect of further interest rate cuts. However, the U.S. government shutdown has increased uncertainty about rate cuts.
The spot price of gold had already surpassed $3700 per ounce, setting approximately 36 closing record highs so far this year, with an increase of over 40%. On Monday, the price of gold briefly reached $3798.73 per ounce, marking a new all-time high.
Gold often performs well as a hedge investment in low interest rate environments and during periods of political and financial uncertainty. Research from the Federal Reserve Bank of Chicago indicates that investors believe gold can withstand risks during economic downturns.
Sameer Samana, Global Equity and Real Asset Strategist at Wells Fargo Investment Institute, told CNBC earlier this month that, “Gold meets all these conditions.”
According to a recent investment strategy report from Wells Fargo Investment Institute, analysts “expect continued central bank buying of gold and an increase in geopolitical conflicts to support growth in demand for precious metals.”
Blair duQuesnay, an investment advisor at Ritholtz Wealth Management, stated to CNBC, “There’s no doubt that the price of gold has been on an upward trend and has garnered widespread attention from investors.”
How can investors invest in gold? Investors can purchase physical gold or gold-related financial investment products to invest in precious metals.
Most experts recommend investing in gold through Exchange-Traded Funds (ETFs) and including them as part of a diversified investment portfolio rather than buying actual gold coins or bars.
Samana mentioned, “Gold stocks tend to underperform during severe economic stress, so if people are looking for investment opportunities, ETFs backed by gold bars perform better than gold-related stocks and gold mining stocks.”
According to ETF.com, SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) are two major gold ETFs.
DuQuesnay stated, “Gold ETFs are the most liquid, tax-efficient, and cost-effective way to invest in gold.”
She added, “Holding physical gold is much less efficient mainly due to higher trading costs and the need to consider storage of bars and coins.”
DuQuesnay further noted that the correlation between gold mining stocks and the underlying gold price is not as tight, with a stronger link to business fundamentals.
Despite gold hitting record highs, financial advisors typically recommend limiting gold investments to below 3% of the total portfolio.
(This article is for general informational purposes only and does not have any recommendation intentions. The publisher does not provide investment, tax, legal, financial planning, real estate planning, or other personal finance advice. For specific investment matters, consult your financial advisor. The publisher does not assume any investment responsibility.)