For generations, trading gold has been a precious commodity. It was used as currency and considered as a symbol of the rich and powerful throughout documented (and unrecorded) history. The long-term value of gold indicates its stability and attractiveness over time. It is considered one of the safest investments by investors, as it quickly regains its value during periods of economic downturn. Its value often changes in the opposite direction to stock market or economic movements.

According to the Financial Express, when investor confidence is shaken, gold prices tend to rise as terrified investors look for a safe place for the money being withdrawn from the market. Gold is also a safe haven in times of inflation, holding its value much better than currency-backed assets, which may grow in price but fall in value.

Investors, who are considering investing in gold, can start by looking at the spot price of gold, which is the current price at which it can be bought and traded. The spot price of gold in India is expressed in terms of 10 grams. For example, the price of gold on Thursday, February 3, 2022, was INR49,505. When looking at historical gold prices, it is easy to notice that the price of this precious metal has skyrocketed in the 2000s. According to the Reserve Bank of India, gold prices were, on average, at INR 12889.75 per ounce in 2008. Due to investor demand for gold and their sentiment as the economy deepened into the crisis, gold prices rose to nearly INR 25,723.66 in 2011. By April 2020 Gold prices are somewhat lower than they were a decade ago, but they have continued to perform well despite the economic downturn.

In the late seventies, a similar incident occurred. After the global price hike in the 1970s, the value of gold declined over the next twenty years before rising again around 2000. During the pandemic crisis, the demand for gold rose, and its price also increased. As we enter 2022, investors are still not sure if the current rally will continue because it is also possible that the trend will continue or the price could go lower for an extended period. However, it is important to keep in mind that while gold is weakening, not every investment will result in any interest or profits.

investing in gold

Buying gold is different from buying stocks or bonds. Anyone can get gold coins or gold bars (a gold bar-shaped piece with a stamp) for their physical possession. The purity level and the amount of gold in the bar are stamped on it. The value of bullion or coins is determined by the element's precious metal content rather than its rarity or condition, and it varies throughout the day. Many banks, dealers, and brokerage organizations sell bars and coins. There are also gold mining stocks, gold futures, gold-focused exchange-traded funds (ETFs), and other classic financial instruments available to safely invest in gold. Investors who buy gold-backed ETFs buy shares in a fund that owns gold, but they don't have a claim to the gold itself.

One can also invest in gold virtually which offers the best of both worlds, exposure to gold prices without holding the actual gold and options to convert it into real gold where applicable. There are also many gold savings plans run by different jewelers where you can invest a certain amount on a monthly basis and exchange it for gold jewelry on maturity with certain discounts offered by the jewelers. This route is especially useful for people who are looking to buy jewelry in the future for marriage or gift purposes and can start saving for them beforehand. A lot of jewelers have started offering online options for investing in such schemes, where the customer can invest in the home.

One of the advantages of holding gold as an asset is that it is relatively liquid compared to other assets such as real estate and can be easily liquidated quickly, if needed, either through direct sale or taking out a loan against it. However, it is important for everyone to note that investing in gold with the expectation that it will never lose its value is not a foolproof idea. Gold, like any other financial asset or investment, is subject to supply and demand pressures that cause price changes. Hence, it is very important to consider all risks before investing in gold or any other economic sector.