There is no question that when it comes to physical gold, you are dealing with a very different animal in comparison to stocks and bonds, which is why you need to work out a strategy that allows you to take the right approach to buying and trading bullion.
If you want to get a good handle on where gold prices are headed right now, you can read it from MoneyMorning.com/tag/gold-prices/. In terms of investing in physical gold and how to go about it successfully, you would be joining a growing number of investors who reset their traditional thinking and investment approach after the global financial crisis of 2008.
This particular phenomenon is just one example, albeit a striking one, as to why many consider buying bullion to be a tangible attraction.
Picking the right time to invest
If any investor could accurately predict exactly the right time to invest every time they laid their money down, they would obviously be very wealthy and will have achieved something no one else has done up to that point.
Of course, some investors seem to fare better than others and some certainly appear to have that Midas touch, but there are ways of improving your odds of success.
If you are contemplating investing in physical gold, that same question may well be crossing your mind, is it a good time to invest? The simple answer to that question is that it has always been a challenge when trying to determine when the right time to invest actually is, and it will always be the case to a certain degree, although you can get clues to use, such as identifying specific trends.
When it comes to the gold price for example, this has managed to show an upward trend for the last decade overall. There will be times when the price will rise and fall in response to market conditions and how markets are faring in general, but if you at least know that there is an established trend in a certain direction, it can help you to stress less as long as you are taking a longer term view with your investing.
A simple rule that works well in the sphere of investing in gold in particular, is to set some clear investment objectives and then stick to them.
You can afford the luxury of having several objectives, that are both short as well as long term, but the main thing to remember is that you must aim to avoid deviating from your chosen path.
This means avoiding the sort of knee-jerk reaction that can ultimately cost you money, when you abandon your strategy in response to individual market events. If your thinking and strategy are sound, it often pays to ride out the storm and not react to price fluctuations either way.
Understanding the connection
It is also important to understand that there is a connection between currency values and physical gold.
Buying gold bullion should be viewed as just one part of the investment equation. At the point of investing in a commodity like gold, which is priced in U.S dollars, you are in some respects striking two different bets at the same time.
You are not only speculating on the future value of the metal, but you are also exposing yourself to an element of currency risk, as the future value of the currency will be an influential factor in the value of your investment.
Storage and insurance issues
When you are looking at acquiring some physical gold in your portfolio, you will need to consider storage and insurance costs.
Bullion perhaps presents a more logistical problem compared to coins or small ingots, which are more portable and easily stored. You should however remember that gold coins are not viewed as an ideal investment vehicle for short-term trading.
Prices for coins can fluctuate with more volatility, so it is often considered better that you hold any coins for at least three years and probably aim to hold them for a lot longer.
Information at your fingertips
Apps are an increasing feature in many aspects of our lives and it makes sense to use the technology to gain a potential edge with information available from a smartphone app which could help you to decide when to invest in gold.
For access to explanations for terms and scenarios that you encounter in financial markets, you might want to look at the Investopedia app, although it does cost to download it. Gold Research is an iPhone app that aims to give you an insight into supply and demand drivers, provided by World Gold Council researchers and other specialist contributors, and it is free to download.
Search around and you will be able to find a range of different apps that should appeal to your level of market knowledge and help you with your investment decisions.
Sophie Simmons learned much of what she knows about trading and investments from her Grandfather. It’s something that has set her up for life, and she’s pleased to be able to share some tips with like minded people in her articles.