At the time of writing, the world is going through the Coronavirus pandemic.
These are uncertain and scary times for everyone, with the pandemic potentially causing a recession and financial crisis. As the risk of a financial crisis keeps increasing, more people are turning towards safe havens, such as gold. However, markets are volatile and the pandemic has disrupted supply chains and logistics from around the world. So is gold still a good investment?
In this article we’ll be covering the benefits of investing in gold and whether you should be investing in 2020.
There are many advantages to buying real, physical gold. We’ll be covering a few of them below.
Gold is a special type of investment because it’s an investment that you can literally hold in your hand. It can’t be hacked, it can’t be destroyed in a fire and it can’t be blown away in a storm. This is important for one main reason: it’s independent from other markets. No matter what happens in the world outside, your gold will still be gold and no one can take it from you. This is different to fiat money, which is at risk of governmental quantitative easing, and therefore inflation.
Gold is a finite resource which has maintained its value throughout the centuries. This means that even when there is rising inflation or a financial crisis, gold prices usually rise as people start moving their money into safer assets.
The next advantage of gold is that it is a great way to diversify your portfolio. As mentioned above, gold prices tend to increase when stocks and bonds lose value. When comparing to previous financial crises, we can see that when stocks decreased by a whopping 20%, gold increased over 30% all throughout the recovery in 2011.
Having a balanced portfolio means your investments don’t decrease as much as the stock market, which means you get to reduce uncertainty and risk.
Compared to some investments, gold is a very easy asset to buy. No need to become a stock market expert or art connoisseur; with gold you just need to use a broker that’s buying certified pure gold.
The main thing investors worry about when it comes to gold is the high fees. Actually, we were pretty alarmed too, which is why we took it upon ourselves to make gold affordable. That’s why with Minted you’re paying one of the lowest fees in the market:
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You’re now aware of the main benefits of gold investments, and are possibly interested in getting started. However, amidst the current crisis, is now still a good time to be investing in gold bars? The short answer? Yes.
Here’s the long answer:
At Minted, we believe an investor’s portfolio is not complete with gold. Gold is essential in order to keep a balanced portfolio, to hedge against inflation and to keep some investments outside of the international financial system. We’re seeing those who already bought gold already benefit from those safe haven investments, with gold prices steadily rising due to increased demand (19% return on the pound since the beginning of the year!).
However, it is true that the pandemic has disrupted part of the supply chain in the gold industry. Mining companies have had to reduce output in order to comply with social distancing rules, most flights transporting gold have been cancelled and refineries are also reducing output. This means that it’s harder for supply to meet the increasing demand, and this is therefore increasing premiums (the overall fees).
We believe that gold is always a good investment. However, due to the increase in premiums from gold mining companies during the pandemic, the cost of buying gold has increased. Does this mean it’s still worth buying gold? Our opinion is that it depends on the premiums you’re paying.
At Minted, we’ve been working hard to keep the premiums as low as possible. We don’t charge insurance or storage fees on our gold savings plan for the first year. The shutdown does mean we are unable to deliver gold to your home, but your gold will still be held in our premium vault and we’ll be able to deliver once the lockdown is removed.
Is gold a good investment in 2020? We always believe gold is a good investment due to its unusual properties and strong returns over the years. The higher premiums may make some investors hesitate, which is why we encourage shopping around and searching for affordable fees (hint: check out Minted). In the meantime, we hope everyone stays safe and strong.