Follow the gold price live and learn more about investing in gold.
Why Invest in Gold?
Gold is often considered a safe haven, offering a sense of security amid economic volatility. Its intrinsic value and historical significance make it a favored choice for portfolio diversification. Learn more about investing in gold.
Gold is often seen as a hedge against inflation, maintaining its value over time.
During times of geopolitical or economic instability, gold is a safe-haven asset that tends to retain its value.
Gold provides diversification in an investment portfolio, reducing overall risk.
The finite supply of gold supports its long-term value appreciation potential.
How to Invest in Gold
Gold's value is mainly derived from external factors, like fiat currency fluctuations, rather than intrinsic change. In a diversified portfolio, gold serves as a hedge against economic uncertainties and the erosion of fiat currencies' purchasing power.
Buying physical gold in the form of bars, coins, or jewelry provides a tangible asset but requires secure storage and insurance. Resale might necessitate verification of authenticity and purity.
Exchange Traded Funds (ETFs) primarily focus on gold mining companies mining the gold. They are traded on exchanges and are automatically regulated, offering liquidity and easy access to a gold investment. They usually have lower expense ratios compared to other gold funds and eliminate the need for physical storage.
Daily Traded Gold Funds
While they share similarities with ETFs, daily traded funds have a unique edge: they're under the daily supervision of a financial expert. This offers investors the perk of having a professional fund manager monitoring and adjusting the investment portfolio.
Exchange Traded Commodities (ETCs) provide exposure to physical gold, traded on platforms where you can buy funds or stocks, like Avanza or Nordnet. They involve a fee for the storage and management of the gold by a third party, offering a hassle-free investment in gold without dealing with physical assets.
Gold derivatives derive their value from gold prices. Unlike physical gold or ETCs, derivatives don't provide the same level of risk since the investor has a counterparty risk towards the issuer. Due to this, gold derivatives should not be owned for the long term but can instead be used for short term trading.
Gold, a precious metal with a rich history, has been a symbol of wealth and a form of currency for centuries. Its value is not subject to the whims of government policy to the same extent as other assets, which has made it a sought-after investment, especially in times of economic uncertainty. The price of gold is influenced by a myriad of factors such as supply and demand dynamics, geopolitical tensions, and macroeconomic trends – but the intrinsic value of gold has neither reduced or increased.
Gold plays a multifaceted role in our world. It's not just locked up in vaults or fashioned into jewelry; it's also extensively used in electronics due to its excellent conductivity and resistance to corrosion. The medical field leverages gold in certain diagnostics and treatments, it plays an important role in aerospace engineering, where satellites use gold to reflect infrared radiation and protect against heat, and many more applications. Its diverse applications and lasting appeal across multiple sectors demonstrate the versatility and enduring relevance of this precious metal.
Things to Consider Before Investing in Gold
Investing in gold requires a well-thought-out approach. Before you decide to invest in gold, there are a few important aspect we recommend you consider to understand what option is best for you:
- Risk Assessment and Time Horizon: Whenever investing in gold it's crucial to assess your risk tolerance and time horizon. Gold has high liquidity but can be volatile; its price can drop, albeit it has the potential to rebound due to its inherent value. Assessing your financial situation and understanding the implications of a market crash on your gold investment is vital.
- Allocation Size: Investors suggest an allocation limit of around 10-20% towards gold. However, the ideal allocation may vary depending on the current economic climate. If there is a lot of uncertainty in the financial system, or if gold has a low value relative to other assets, it can be a good idea to allocate even more towards gold. Gold can act as a "portfolio insurance," providing a safety net much like a home insurance policy does for homeowners.
- Investment Method: Each method has its pros and cons; hence a thorough evaluation is essential to ensure it aligns with your investment goals and risk tolerance. For example, keeping physical gold at home might not be the most convenient option, and can be difficult to convert to cash. Select a method that suits your circumstances, whether it's buying physical gold, investing in gold ETFs, or considering gold mining stocks.
- Sustainability: As global emphasis on ethical investments grows, regulations are being rolled out to define what constitutes a sustainable investment. Certain entities will be required to provide certain documentation, and funds must substantiate their sustainability claims. It's essential to be well-informed, especially as the definition of "green" investments becomes more standardized. Before venturing into gold investments, ensure they align with these emerging sustainability benchmarks.
Factors Influencing the Gold Price
The price of gold is a complex interplay of several factors, some of which are unique to the gold market. Understanding these factors is paramount for anyone looking to invest in gold or monitor its price for other financial endeavors:
- Supply and Demand Dynamics: The basic economic principle of supply and demand is a significant driver of gold price. Demand for gold comes from various sources including jewelry, technology, central banks/governments and from other investors, while supply is derived from mining and the recycling of gold products.
- Geopolitical Tensions: Gold is often viewed as a 'safe haven' asset during times of geopolitical strife. When tensions rise globally, investors flock to gold, driving up its price.
- Inflation and Deflation: Gold has historically been seen as an inflation hedge. In times of inflation, when the value of fiat currencies depreciate, the price of gold tends to rise (or rather, gold has the same value, but the fiat currencies depreciate against gold).
- Central Bank Gold Holdings: Central banks may buy and hold vast reserves of gold which can significantly impact the gold price. When central banks decide to increase or decrease their gold holdings, it can send ripples through the global gold market.
- Interest Rates: Central banks control the expectations of the economy, often making forecasts to steer it in the right direction, at times not actually acting upon it (hedgehog interest rate). The rule of thumb is to not do what the central bank says, but rather do what they do.
- Economic Stability: Economic downturns often lead to higher gold prices as investors seek safe-haven assets, while economic booms might see a drop in gold price as investors turn to other assets like stocks.
How Currencies Relate to the Gold Price
Unlike fiat currencies, gold boasts an intrinsic value derived from its unique properties. This distinction is crucial; while fiat currencies, like the USD, have seen their value wane over time, gold has maintained its stature.
When engaging with gold as an investment, the specific currency employed doesn't alter the end result. Whether an investor chooses to transact in USD, SEK, or any other currency, the final value, when converted back to a common benchmark, remains consistent – calculation example.
However, a pivotal element that often goes overlooked is the role of exchange rates. An investor must account for these rates both at the time of purchase and sale to get a genuine sense of their investment's performance. Unfortunately, many modern depository platforms fall short in this area, using daily exchange rates indiscriminately for both buying and daily valuation. This can lead to misleading representations of investment growth, sometimes showing an inaccurate decrease when, in reality, there has been substantial growth.
Why Invest in Gold with AuAg Funds?
Precious metals like gold play a pivotal role in any portfolio. The metal gives an investor exposure towards two global trends. The first one is monetary inflation, where governments and central banks create more debt in the financial system. The second one is the transition towards a greener world. AuAg Funds actively fosters change towards more sustainable mining practices – investing in leading enterprises, supporting early adopters, while sidelining those slow to adapt.
The mining industry is a substantial contributor to greenhouse gas emissions. However, metals are indispensable for manufacturing goods like batteries, solar panels, and wind turbines. A greener future is unattainable without metals including gold, silver, platinum, palladium, and copper. Therefore, AuAg Funds collaborates with mining companies to encourage and expedite the shift towards more sustainable extraction of these crucial metals.
Explore our Funds Investing in Gold
AuAg Funds offers funds that focus on providing exposure to gold and green technology. We invest in gold mining companies and the funds fit well into a portfolio of traditional assets as they have low correlation with shares and bonds.
AuAg Silver Bullet
AuAg Silver Bullet invests in companies that mine silver – a metal that is in high demand due to its monetary properties as well as the properties that make it indispensable in our transition to a greener world. While the primary focus is silver, it's common for mining companies to unearth other metals in the process. Thus, the fund dedicates 60% of its resources to silver, with the remaining 40% spread across other metals like copper, zinc, and gold.
AuAg Precious Green
AuAg Precious Green reshapes the conventional 60/40 portfolio by prioritizing green-tech companies, connecting investors to the green megatrend. With 60% dedicated to pioneers in green technologies and essential metal miners, the other 40% is anchored in precious metals, mainly gold, safeguarding the investments.
AuAg Gold Mining
AuAg Gold Mining offers exposure to an equally weighted basket of 25 ESG-screened companies active in the gold mining industry. The fund tracks the Solactive AuAg ESG Gold Mining Index which focuses on companies with low ESG risk. While the primary focus is gold, it's common for the mining companies to unearth other metals in the process, giving you exposure to other metals such as silver and copper.
FAQ – Gold Price
Gold is usually priced in USD/oz. But this will vary depending on where you are. The gold price in Europe is usually priced as euro/kg, while in Sweden the gold is usually priced in SEK/g.