The managers consulted by Inertia comment that the preferred option for this bet to seek refuge in times of turmoil must necessarily go through physical gold ira. That is, not in derivatives that in the end are still linked to a greater or lesser extent to the ups and downs of the financial markets and do not imply the possession of any real asset ‘in your pocket’.
However, there is more than one way to invest in gold like this. The first and most obvious is the purchase of physical pieces, of which different qualities, sizes and weights are offered in the market.
Not everything that glitters
Although it is common for houses specializing in this business model to offer the pieces in grams to facilitate calculations to investors, the usual unit of measurement of the precious metal is the ounce, which this Friday equaled all-time highs by exceeding 1,900 dollars, a level that however it was not able to retain until the close of the session.
Several managers consulted by Invertia confirm that the demand for physical gold pieces has rebounded strongly in recent weeks, which has contributed to this price escalation. The need to seek a safe haven for savings has increased as political tensions between London and Brussels, on the one hand, and Beijing and Washington, on the other, have increased. Factors that have added to the growing fear of new confinements due to a second, more dramatic wave of infections.
In this sense, the sale of physical gold pieces multiplied strongly during the past confinement. Up to six times at the ‘online’ counters of various firms in the sector. A demand so strong that even parts that are not usually in the circuit found buyers. A circumstance that makes the less experienced have to be extremely cautious.
The most knowledgeable in the matter make a series of recommendations that include not investing more than 10% of the assets, paying attention to the guarantee seals of the physical pieces, resorting to recognized and supervised firms, choosing the most storage option. Convenience and possible costs, and focus on easy-to-install parts. This last tip becomes more convenient now, as the prevailing economic uncertainty could lead to unexpected liquidity needs.
The rise of exchange-traded funds
However, this is not the only option for investing in physical gold. Especially if what you are most interested in is having the security of this bet but without having to guard the bullion, coins or bars. Here is the increasingly popular option of investment funds listed on this raw material.
In this case, the investor must ensure that the chosen fund actually invests in physical gold, not in derivatives or shares of companies linked to this raw material. Although these others are valid options, it would again fall into a greater correlation with the markets and one would be left without the support of the physical pieces that the managers of the funds of the first type – often labeled with the acronym ETP – do guard in the first person or through delegation.
Countercurrent mining
The third option that managers indicate to gain exposure to physical gold is through investment in mining companies specialized in this raw material. Although those that meet this condition have more than shown their correlation in the face of the wobble in the financial markets, experts warn that the risks that are assumed are greater, starting with the one that implies that beyond the price of the ounce, it comes into play the management and evolution of the business and the balance sheet of the selected company.
A recent report by Bank of America focuses on the rebound in merger operations in the sector, so investing in a midsize miner with expectations of a possible acquisition by a larger player seems to acquire a greater sense. “After years of low investment [in corporate operations], we see production profiles under pressure and reserves in decline,” they say from the American bank.
With no less than 12 transactions announced throughout a second quarter of the year in which bankruptcies or the accumulation of liquidity have been the bread and butter in many other sectors, Americans conclude that “the evidence is too obvious to ignore.” And it is that since the fourth quarter of 2012 such activity was not seen, such that it has mobilized 2.86 billion dollars.
So far this year, Barrick Gold, the main gold miner on a global scale, accumulates a revaluation of 58%. Very close is Newmont Corporation, with profits of 53% since the beginning of this year of the coronavirus in which the consensus of analysts continues to see the potential to add 13% more to its graph. And with 15 tips to buy compared to only five to keep and not a single one to sell.