Gold is, and always has been, a symbol of wealth and status. It’s a tangible asset and, particularly during periods of political and economic uncertainty, an attractive investment opportunity.

As with all investments, there are risks and rewards. But if you want to diversify your portfolio, preserve wealth, and use the precious metal as a hedge against market headwinds, gold is the “go-to”.

What influences the price of gold?

At the beginning of 2016, gold was trading at $1,060.80 an ounce. Since then, it has continued to gain value – analysts predict it will reach $1,500 by year’s end.

The current price is by no means approaching the metal’s record high. However, various factors are driving up the price of the lustrous metal:

• Interest rates: The current low interest rates mean the ‘opportunity cost’ of holding gold is lower. In other words, by investing in gold, you’re not missing out on guaranteed gains in interest-based assets, such as bonds. As a result, demand is higher, and there’s an associated uptick in price.
• Inflation: higher levels of inflation, or the price of goods and services, are pushing the gold price up.
• Economic data: Comparatively poor economic data in the USA, relating to employment, wages, manufacturing, jobs and GDP growth, is driving the gold price higher. Although the US economy is showing signs of growth, there are doubts the Trump administration has the ability to provide the stimulus it needs to reach full potential.
• Supply and demand: The demand from Asian markets, in particular, coupled with a limited supply of around 500 tons of gold per year for investment purposes, has motivated a steady rise in the price of the metal. In the future, demand is expected to soar, as the reserves of mineable gold are fast running out.
• The US Dollar: As the price of gold is dollar denominated, a fall in the value of the currency tends to push the gold price higher, and vice versa.
• Political noise: The uncertainty around the Trump government, Brexit, North Korea, Venezuela, and the Middle East has resulted in an increase in the price of gold.

When is a good time to invest in gold?

Although predicting the best time to invest in gold is not an exact science, history tells us that times of uncertainty present the greatest opportunity.

The global economy is still struggling to recover and, with Trump ruling the United States and division within the ANC at home, political uncertainty is greater than ever. Arguably, this is the perfect time to buy gold.

It’s worth mentioning that gold has been on a long-term winning streak for several years now. There’s no guarantee that this streak won’t end.

Buying small quantities of the precious metal whenever you can, rather than making a larger investment, is a viable strategy.

Due to fluctuations in the dollar value of gold, you’ll have the advantage of paying lower average prices. If you’re serious about investing for the long haul, monitor the major influencers outlined above, keep an eye on the gold price and take the plunge whenever there’s a dip in value.

How to invest in gold?

There are several ways to invest in gold. In South Africa, you can buy:

• bullion, in the form of refinery certified bars of gold
• gold coins, such as Krugerrands or Natura gold coins
• Exchange Traded Funds (ETFs) that include gold or mining investments
• shares in JSE-listed mining companies.

Gold has shown a gain of 6.5 percent in the past month. It’s an asset class that dazzles during darker times.

Use gold as collateral for a cash loan

If you’re experiencing cash flow problems or have unexpected expenses and need funds quickly, it doesn’t necessarily mean you should sell your Krugerrands, gold jewellery or other gold items.

Instead, you may be able to use these items to obtain an asset-based, short-term loan.

At Lamna, we offer fast, discreet loans against the value of a wide range of assets, including gold and luxury watches, jewellery, antiques and artwork, as well as paid-up vehicles. For more information about using an asset to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit our online application form.