Guest post from Kate Thora
Buying gold has historically been a great long term investment. And it’s the best performing asset of the 21st century, offering an average return of 15%.
But investors have often overlooked gold in recent years. Stocks and bitcoin investments have been at the forefront and the precious metal has fallen out of favour. However, with gold prices low, could 2018 be the year to see a reversal of fortunes for gold investors? There are a number of factors that point to a reversal. Here are five reasons to buy gold in 2018:
Markets are Uncertain
Political changes taking place around the world make the markets uncertain for the year to come. Donald Trump’s presidency, Brexit and the war in Syria are contributing to an unprecedented level of unpredictability. The value of the dollar looks set to freefall. In times of flux and change, people have often turned to tangible assets rather than intangible stocks and shares. Physical gold offers the certainty that people are looking for when they make big investments. And it’s helping people protect their wealth in the face of financial risk.
Other Investment Options Aren’t Offering Good Return
Thinking of putting your cash into a savings account? Interest rates are currently so low that your money will earn little in the bank. Add high levels of inflation into the mix and you’ll be losing money even as you gain interest on it. Similarly, bonds are a poor investment option at the moment. The market is so uncertain that risks seem to outweigh potential gains. By locking you in for a long time, bonds deny you the easy liquidity that gold offers. Gold can be easily converted into cash, it’s physically indestructible and safe from the risks associated with a digital world.
There’s Growing Momentum
Gold is looking better than it has in a long time. Higher lows suggest that a new floor – at around the $1200 per ounce mark – has been established and there are encouraging signs that gold will power higher over the coming year. Gold prices are up around 6% over the last six months. And at the beginning of the year surged more than 5% in a few weeks. Gold prices tend to rise after increases in interest rates so, with a number of governments threatening to increase interest rates, now is the time to move into gold.
Production Output is Low
New regulations regarding gold mining have come into place in South Africa and Indonesia. Companies like Freeport McMoRan have also chosen to make financial savings by closing down working sites. Gold production is at its lowest level since the financial crisis. Whilst this might not be good news for mining companies, it’s great news for investors. Less gold coming out of the ground means prices are sure to rise.
Strong Global Demand
Demand for gold is increasing across the world. In India, the world’s second biggest gold market, imports rose by 67% in 2017. Similarly, in China, demand for gold bars was up 40% in November 2017, compared to the year before. Coupled with a slowdown in gold production, this demand could mark the start of a huge upturn in the price of gold.
Anyone looking to make an investment of gold this year needs to move quickly. Prices are already moving up. With its great liquidity, tangibility and current structural factors all working in gold’s favour, there are many reasons to buy gold in 2018.
Kate Thora works as Content Manager at BizSet. She is a well-experienced blogger who loves to share her knowledge concerning finances and investment opportunities. You can reach her out at her Twitter handle @katethora1.
Thanks to Kate Thora
And Read This Article from Mark O’Byrne
“Four Key Themes To Drive Gold Prices” here
The Deviant Investor