Why We Remain Hopeful About Gold Investments

While energy, real estate, utilities and communications currently show a downward trend, hope for the future of gold investments in 2023 remains high. One needs only to look back at the performance of this precious metal during the past five years to understand why it is a favoured choice of so many investors. On the first day of January in 2018, one could have purchased a Krugerrand for approximately R 15 500.00 and sold it for approximately R 36 800.00 in 2023.  

Although the Gold spot price does sometimes experience a dip, such deviations tend to be relatively minor and gradual, unlike the often catastrophic drops in share prices that occur overnight and without warning. Furthermore, such events often spur renewed interest in the precious metals market, driving spot prices higher. To protect themselves from such situations, many experienced investors choose to include Gold in their portfolio as a hedge.

Gold Investments are Widely Seen as a Safe Haven

In common with most countries, Covid-19 and the national lockdown have led to closures, job losses and rampant inflation in South Africa, further exacerbated by the disruption of international supply chains following the Russian attempt to annexe Ukraine. Nevertheless, fear and uncertainty drove the metal’s price to an all-time high during this devastating time.

Looking back at the stock market collapse in 2007, many on Wall Street lost everything when losses from subprime loans created widespread panic among banks and investors. However, that same event also triggered a sharp increase in the Gold price. Those who invested in the yellow metal following that collapse enjoyed a fourfold return over the following four years, adding credence to the assertions of motivational speakers that problems are merely new opportunities in disguise.

What proved to be true in 2017 remains equally valid in 2023. While the need to curb spending continues, the price remains steady, with only relative up and downward movement, making this a favourable time to buy. As inflation declines, a return to growth invariably follows. The good news is that analysts project a return to the Reserve Bank’s target headline inflation rate of between three and six per cent during the second half of this year, reinforcing the benefit for South Africans who decide to invest now before prices start rising.

How to Get Started with Gold Investments

There are several ways to invest in Gold. For example, one could purchase shares in a mine, exchange-traded funds (ETFs) or futures. However, mine closures occur when ore reserves dwindle, leaving investors with nothing, while EFTs have drawbacks like trading fees, low trading volumes and hidden risks. Futures carry the risk of losses greater than your investment.

The launch of the Krugerrand created the option for the general public to purchase physical Gold. Its legal tender status means that this Bullion coin is exempt from VAT – another reason for its worldwide popularity.

Most analysts agree that the prospects for Gold investments are promising. So, today could be a great time to familiarise yourself with the extensive range of Krugerrands and Bullion bars available in-store and online from Mr K.

DISCLAIMER: The information above was derived from reliable sources and deemed accurate at the time of writing. However, changes following publication may have affected its accuracy. Such changes may occur without notice, and Mr K cannot be held liable for inaccuracies in this article’s content or how a reader may choose to interpret it.