Recently, the investment trend towards commodity diversification has more and more people thinking about investing in gold. However, I, Jason Galanis, believe gold can be an extremely volatile, yet effective tool in one’s investment portfolio.
Most investors select gold as a way of diversifying their risks, especially if market conditions make it so risks are more common. Gold’s even been used to prevent losses or incur profits in market conditions like the aforementioned.
Though, it doesn’t stop many new investors from choosing gold as an investment vehicle. Most of them, however, should understand one thing about gold investing: there’s always a catch.
According to industry experts, there are reasons behind why gold investment has a catch:
- Gold prices are more volatile than what most beginners expect.
- Gold prices are often affected by day trading, as performed by central banks and speculators.
Gold prices may rise, but those particular reasons point to gold being a lot more volatile than most people think.
Let’s look at an example. Gold prices are known to get as high as thousands of dollars. At the same time, gold prices can drop down to just hundreds of dollars in just a few months. If you were an investor who had a lot of stake in gold, losing hundreds at a time isn’t really something you want out of an investment like that.
Gold investments are said to ‘shine’ when used as a hedge against losses for assets like real estate and bonds. That’s something you should think about if you’re planning to invest in gold. Most beginner investors, however, probably want to invest in gold for getting a return on their investment. And, that’s fine, too.
Just don’t forget to talk to a financial adviser for advice on what movement to make.