However, to know where the price of gold is going, you have to look at the gold price forecast. Here is a look at the price of gold in the short, intermediate and long term.
Short term – Next six weeks
Over the short term, you can expect gold to move sideways. This is actually not bad considering just about every equity is being routed thanks to the coronavirus pandemic. Therefore, if you are looking for a place to minimize your losses over the next six weeks, then perhaps gold may be a place to look at.
Intermediate Team – Net 12 months
Over the next 12 months, you can expect many governments to enact huge spending programs in order to stimulate their economies.
That means there’s going to be lots of money printing and currency devaluation. Therefore, many fiat currencies will lose their value over the long term.
That is bullish for gold. You can expect gold to outperform equities and become one of the leading assets going into the next year.
Long Term – Next three years
Over the long term, we could see another prolonged bear market in equities just like in the 1970s and the 2000s. During those times, gold vastly outperformed all large equity markets.
After a decade-long dormancy, gold could have its moment in the 2020s. If you are looking to make outsized gains during the next three years, then gold could be a perfect investment.
Why gold is an important investment tool
Gold is an important investment tool because it is uncorrelated with equities. That means when equities go down, gold usually tends to go up. Also gold is uncorrelated with the US dollar. Simply put, when times are bad, people will flock to gold as the ultimate safe haven. For centuries gold has been the investment of choice during times of war, inflation, and instability.
Different ways you can invest in gold
There are a number of different ways that you can own gold. Each of these ways has its own advantages as well as disadvantages. You should carefully consider each investment vehicle before making your final decision.
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1) Bullion
You can own gold as either coins or bullion bars. Gold bullion and coins can range in size from one gram to 100 kilograms and sometimes more.
When you buy gold you will purchase it at spot value plus the premium charged by the bullion dealer. Once you buy the gold, you can take possession of the metal or you can have a third party store it for you for a fee.
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2) Exchange-traded funds
Another way to own and trade gold is through gold exchange-traded funds (ETFs). An exchange-traded fund trades like stock. However, some of these exchange-traded funds have actual gold reserves while others do not.
It is important that you read the prospectus on any ETF before you make any trading decisions. Most experienced gold traders use gold ETFs to speculate on the price of gold but do not use it as a way to own gold.
other valuable tips:
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3) Gold miners
One of the best ways to invest in gold is to buy stock in gold mining and gold production companies. These gold miners can range in size from junior miners who are exploring an untapped new mine or large gold miners with huge production operations.
Many gold investors like gold mining stocks because they can offer outsized returns compared to investing in actual gold. It is important that you research these gold miners before you invest. Some of the junior gold miners are sometimes exposed as frauds.
As Mark Twain once famously said, "A miner is a liar standing next to a hole in the ground." That is not true in all instances but you should do your due diligence.
Gold can be the next big trade of the 2020s. Therefore you will want to check the short, intermediate and long term gold pricing forecast. Be sure to carefully do your research before making your final investing decision.
Image Credit: gold forecast by Pixabay
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