Why you should invest in gold in 2023 (2024)

FAQs

Why you should invest in gold in 2023? ›

Investing in gold can often be a prudent choice for those seeking to diversify their portfolios, hedge against inflation, and protect their assets during economic uncertainty. Gold's enduring value and its role as a safe haven asset make it a compelling investment, particularly in volatile or unpredictable markets.

The bottom line. Many investors may be turning to gold in 2023, but it pays to do some research before deciding to buy in. Gold may be a good long-term diversifier for your portfolio, but whether it makes sense for you depends on your individual investment plan.

Buy gold before prices rise

While the indicators above are mixed, the bottom line may be that now—April 2024—is the time to buy gold. Multiple industry experts say gold could have a record year, so you'll want to purchase your precious metals before prices soar.

Gold can serve as a hedge against inflation and is considered an alternative asset, other than cash, stocks or bonds, and often retains its value during times of political and economic uncertainty.

Silver is a much more industrialized metal than gold is. Gold is really an investment and usually for safe haven keeping, while silver has always been the cheap way to play it. But now you don't have to do that because you can gold ETFs these days, and it doesn't require a large sum of investment to get involved.”

The bottom line

Investing in 1-ounce gold bars can be a prudent move for those who are looking to diversify their portfolios and safeguard against economic uncertainties. However, it's crucial to approach this investment with a clear understanding of the market, associated costs and the long-term commitment required.

Con: Gold won't produce income as rapidly as other assets

While stocks and bonds may offer dividends (a share of corporate profits paid to stockholders) and coupon rates (interest paid on bonds), the only way to earn an income by investing in gold is to take advantage of growth in the price of the commodity.

In 2023, however, gold rebounded and again crossed the $2,000 mark in April and May, before sliding a bit to its current level of $1,924.95 as of September 11, 2023. Still, gold is up year-to-date, and there are reasons to think it could break $2,000 again, though there are no guarantees.

Depending on your own preference and aptitude for risk, you may choose to invest in physical gold, gold stocks, gold ETFs and mutual funds or speculative futures and options contracts. Regardless of the form of gold you choose, most advisors recommend you allocate no more than 10% of your portfolio to it.

Based on conversations with several gold investing experts, the price of gold could continue to climb to $3,000 or higher over the next few years, but it's hard to say exactly what the path forward will look like.

When to not buy gold? ›

Stick to your long term investment strategy rather than buying and selling gold according to your emotions. The price of gold can sometimes be volatile, making it a liquid asset but also a risky one in the short term. It's important not to panic or get too excited during big weekly price moves.

Conversely, when the supply of gold is high and demand is low, the price will fall. Additionally, other factors like interest rates, inflation, currency value, geopolitical events, and economic conditions can have an impact on gold prices.

Fluctuations in financial markets can also cause volatility in the price of gold. However, because so many investors purchase gold as a safe-haven asset, its value remains relatively constant. Long-term investments in the precious metal are unlikely to experience losses.

In 9 out of the past 13 calendar years (2012-2023), the domestic MCX gold prices have beaten the corresponding inflation rates for those years. Therefore, gold can definitely help an investor fend off inflation over the long term.

The LBMA (PM) gold price ended 2023 at US$2,078.4/oz – a record high year-end close – generating an annual return of 15%. The average 2023 gold price of US$1,940.54 /oz – also a record – was 8% higher than 2022. Q4 gold demand of 1,150t (excluding OTC and stock flows) was 8% above the five-year average.

The Recent History of Gold Price in India

Over the past year, the gold rates in India have witnessed considerable fluctuations. A significant drop of 12% from January to September 2023 took the price of gold to ₹41,500 per 10 grams — marking the lowest gold price since the lows experienced in April 2020.

Costco gold bars can be a good deal for investors who already have a membership, but the cost of storing and eventually selling them can quickly eat into their value – and your profit margins.

With inflation stubbornly high, some people are looking to gold as an investment. And one place they're buying it is at Costco. Consumers across the country are grabbing hold of gold amid inflation and economic uncertainty. The precious metal is tempting more and more shoppers, turning it into a modern-day gold rush.

Is it better to keep gold or cash? ›

Gold is a unique safe haven asset because it acts as an inflation hedge. This is due to gold's historical tendency to climb in value when the dollar falls. So, the precious metal may help you maintain the value in your portfolio during periods of high inflation.

Your age, risk tolerance, and portfolio size all play roles in determining how much of the world's most popular precious metal you should have in your home safe. As a general rule, advisors tend to recommend limiting gold to 10% or less of the total value of your investment portfolio.

Gold does not react with most chemicals but is attacked by chlorine, fluorine, aqua regia and cyanide and dissolves in mercury. In particular, gold is insoluble in nitric acid, which will dissolve most other metals.

The return of gold as an investment reached almost 25 percent in 2020, and the annual average price of gold increased overall since 2015. The rate of return was 4.09 percent in 2023.

Considering gold's historical annual growth rate of 11.2%, an ounce of gold could potentially be worth about $3,441 in five years from its 2023 value of $2,024 per ounce. This estimation assumes that gold continues to grow at its average historical rate.

Gold tends to perform well during economic uncertainty as a safe-haven asset, providing a degree of stability to a portfolio. By including gold futures in an investment strategy, investors can enhance diversification, and mitigate potential losses from other investments and safeguard their wealth.