Why is investing in gold recommended?
You can invest in gold with any amount. This investment depends on your liquidity and can take various forms of gold. Additionally, gold has relatively higher liquidity compared to other investment markets, meaning that people can cash out their investments at any time. Whenever there is economic instability in a country, many people turn to buying gold to preserve their wealth.
Investing in Jewelry Gold + Pros and Cons
In the gold market, by purchasing decorative gold in addition to its personal use, you can preserve the value of your money. However, this method involves high additional costs on top of the gold’s actual value, such as manufacturing fees, gold seller profit, taxes, and the weight of non-genuine stones, all of which reduce the price of gold when selling. Therefore, purchasing decorative gold is not suitable for short-term investments and is mostly bought for personal use.
Advantages of investing in decorative gold include:
- Preserving the value of money in the long term.
- No restrictions on purchasing decorative gold.
- The possibility of personal use after purchase.
Disadvantages of investing in decorative gold include:
Additional costs are deducted when selling.
There is no possibility of short-term returns or profit from this investment.
Additional costs such as manufacturing fees, seller profits, taxes, and the weight of non-genuine stones are added to the price of gold.
Types of Physical Gold Investment:
The variety of physical gold types has allowed individuals with different budgets, investment capabilities, and risk levels to benefit from this investment method. Different types of physical gold investments in Iran include the following:
Gold Coins:
Buying gold coins is the most common form of physical and direct investment. Gold coins are suitable for both short-term and long-term investments and have high liquidity. Different types of gold coins include the Bahar Azadi coin, Imam coin, half coin, and quarter coin. Inflation in the country has consistently kept the price of coins rising over the long term. This has made it a popular choice for many people to invest in the gold market.
Investment in Melted Gold:
Melted gold refers to second-hand or damaged gold that has been melted under heat and turned into wire. This type of gold has become one of the most popular investment methods in the Iranian gold market due to its numerous advantages. Keep in mind that the price of melted gold is calculated based on the purity marked on it. Investing in melted gold has many benefits, including a lower price compared to coins and jewelry, and high liquidity. Holders of melted gold can sell any amount of their assets.
Jewelry Gold:
Buying jewelry gold provides an opportunity for personal use of gold while preserving the value of money. Gold has long been regarded as a valuable asset due to its intrinsic value and high durability. The unique brilliance and beauty of gold make it a popular choice for jewelry. As a result, many people use gold as jewelry. Unlike coins and ingots, there is no limitation on purchasing jewelry gold.
Investment in Gold Ingots:
Gold ingots are raw and melted gold cast into specific, standardized molds and sold in vacuum-sealed packages. Information such as purity, the name of the producing company, the company logo, weight, and identification code is engraved on these products to prevent fraud. Investing in gold ingots is advantageous due to their high purity, global tradeability, and precise weight and dimensions.
Investment in Second-Hand Gold:
Second-hand gold is known as gold without craftsmanship fees. It is gold that has been sold by the consumer, purchased by a gold dealer, and resold to another individual. Buying second-hand gold has gained popularity in recent years because, in addition to investment and preserving the value of money, it can also be used for personal purposes. Investment in second-hand gold offers advantages such as the absence of manufacturing fees, a lower price, and the possibility of buying without restrictions. In addition to investment, it can be used as jewelry.
How to Invest in Gold through Banks:
The best type of gold investment varies for each individual and depends on various factors such as the amount of investment, risk tolerance, investment goals, and more. If you prefer to use gold as jewelry, you can purchase new or second-hand gold physically.
Additionally, many individuals who intend to invest in physical gold prioritize buying melted gold. On the other hand, purchasing gold in a non-physical form offers several benefits, including the elimination of manufacturing costs, taxes, lower fees, the removal of risks such as counterfeit products or theft, etc.
Moreover, considering the possibility of non-physical gold investment starting from as little as 100,000 Toman in the stock market, this investment method has gained many followers. You can purchase gold with any budget, without needing to pay additional costs like taxes, and without the need to visit in person or spend a lot of time.
Is Investing in Gold a Good Idea?!
Investing in the gold market in Iran and many other countries is considered a popular and high-demand investment method because investing in gold and coins is a suitable option for protecting assets’ value against inflation. Nowadays, gold investment methods are diverse. Therefore, each person should choose a specific method of investment based on their own circumstances. The choice of the appropriate investment method depends on various factors such as the amount of capital, risk tolerance, and individual investment goals.
Advantages of Investing in Gold
Investing in gold offers many benefits. Some of these advantages include:
Protection Against Inflation: Gold is historically known as a store of value that retains its worth over time. Because the price of gold typically rises with inflation, it can act as a safeguard against rising costs and the devaluation of money.
A Window to the Global Economy: The price of gold is influenced by global factors such as inflation, exchange rates, and supply and demand. As an investor, you can benefit from global developments (its price fluctuations) in the gold market.
Diversification in Your Investment Portfolio: Investing in gold can help diversify your investment portfolio and reduce the risks associated with investing in other assets.
Liquidity: Gold is recognized as a liquid asset, meaning it can quickly be converted into cash. This feature can be beneficial in urgent situations where quick access to cash is needed.
Protection Against Economic and Political Crises: Gold is considered a safe investment that retains its value during uncertain economic and political times, making it a protective asset against risks arising from crises.
Preserving Asset Value Against Inflation:
Considering the history of gold trading and its returns, gold has managed to preserve its value well against inflation and economic instability. By buying gold, you can protect the value of your money in uncertain conditions.
Reliable and Safe Investment:
Gold has always been a valuable asset worldwide. While its price fluctuates over time, based on historical data, it is considered a reliable investment in the long term.
Diversification of Investment Portfolio:
Adding gold to your asset collection increases its diversification and reduces investment risk. This helps protect you against price declines in other assets.
Long-Term Growth:
Considering the historical trend of gold prices, the value of gold has consistently grown in the long term. Therefore, investing in gold can be a suitable way to increase your wealth over time.
Profit Opportunity:
Like any other asset, the price of gold experiences fluctuations over various periods. These price fluctuations present an opportunity for traders who can profit by buying and selling at the right times. Therefore, individuals with sufficient knowledge in this field can not only invest in gold for the long term but also profit through price swings.
Saving in Melted Gold with Low Income:
The most common and popular way to invest in gold with a small budget is by purchasing melted gold, as this type of gold can be bought with any amount of funds. Melted gold, which is produced by melting old and worn-out gold, is available in different pieces and sizes with both light and heavy weights in the market.
The various advantages of melted gold have made it an ideal option for investment in the gold market. This gold does not carry manufacturing fees or taxes, allowing you to buy more of it for the same budget compared to new and jewelry gold, which includes such fees and taxes.
Additionally, melted gold is the raw material for making various jewelry and gold items. Therefore, producers and goldsmiths always need it, making it highly liquid. This means you can easily liquidate your investment at any time.
The Best Type of Gold for Investment and Maximum Profit (2024):
Melted gold is an excellent option for those considering gold investment and seeking a good return. It is like a small treasure in your pocket that you can easily convert to cash whenever you want.
But what is melted gold? Simply put, melted gold is gold made from melting old and second-hand gold. Its major advantage is its lower price compared to jewelry and coins, as it does not include additional costs like manufacturing fees.
Which Gold Purchases Lead to Profit Over the Year?
Purchasing gold as an investment can be done for various reasons, and each specific type of gold may yield different profits over time and under varying market conditions. However, there is no guarantee that purchasing any type of gold will be profitable within a year.
To make better decisions, here are some common gold investment options and the conditions under which they may lead to profits over the year:
- Gold Bars and Coins: Investing in these during periods of economic instability and rising inflation can be highly profitable.
- Gold and Exchange-Traded Funds (ETFs): These funds allow investors to buy shares in the fund based on the price of gold without physically holding the gold.
- Shares in Gold Mining Companies: These stocks may increase in value with rising gold prices, especially if the companies have high efficiency.
- Gold Jewelry: Although jewelry usually includes value-added manufacturing costs rather than being an investment, in some cases, its value may increase due to unique design or rarity.
Who is Suitable for Gold Investment?
Investing in gold carries higher risks. Additionally, you can invest in the gold market with any amount of capital you have. Therefore, if you have a risk-tolerant personality or a low investment budget, gold is an excellent choice for you.
Comparison of Gold and Real Estate Investment Profits in the Last 10 Years:
The price of each Imam coin in the free market has increased by more than 39.6 times from 2013 to 2023. However, the price per square meter of housing in Tehran during the same period has only increased by 20.5 times. As a result, the profit from gold investment in the last decade has been higher than that of real estate.
Types of Non-Physical Gold Investment Methods:
With this method, you no longer have to worry about the physical security of your gold, and you pay lower fees when purchasing. However, in non-physical investment methods, individuals need to be familiar with financial markets and have financial expertise. Below are various non-physical gold investment methods.
Impact of Political and Regional Factors:
Events such as wars, global inflation, or any decisions that lead to changes in economic policies can cause fluctuations in gold prices.
Specifically, it can be said that many factors affecting gold prices cannot be accurately predicted before they occur, making it difficult to decide when to buy or sell gold. Next, we will discuss whether it is a good time to buy gold these days and the best strategy for gold investment in these times.
What Are the Best Strategies for Buying and Selling Gold?
To evaluate the outlook for gold, we can consider two periods: short-term and long-term, and divide the factors into internal and external. In the short term, meaning within a few weeks, the price of gold may not experience significant growth, but the global outlook for gold over a longer period, even over a year, is favorable. Looking at the price of gold domestically also shows that in the long term, gold has been a good strategy for preserving purchasing power.
Step-by-Step Buying Strategy in the Gold and Coin Market:
Since investing in gold funds on the stock exchange is easy and facilitated by online investment platforms, the best step-by-step buying strategy for gold can be implemented through this modern financial tool. But how can the step-by-step buying strategy be executed?
Using the step-by-step buying strategy in gold works like this: when the value of gold in the market is decreasing, we allocate a small portion of our cash to buy gold. If the price of gold increases, we make a profit, and if the decline continues, we invest more money into gold, with the expectation that the gold market will eventually rise. This is considered the step-by-step buying strategy for gold.
Buying Gold Funds as a Safe Alternative to Physical Gold!
A comparison between purchasing gold funds and buying physical gold shows that investing in gold funds can offer significant features and advantages.
The disadvantages of buying physical gold, such as purchasing decorative gold items and various types of gold coins, include the risk of theft, loss, and the possibility of them being counterfeit when purchased. Additionally, considering the market fluctuations, buying and selling physical gold while using a step-by-step gold buying strategy can be very challenging. This is because it is not feasible for many investors to visit the gold market daily to buy and sell physical gold.
Therefore, buying gold funds in such situations can be the best strategy for purchasing gold. A gold fund is a portfolio consisting of commodity deposit certificates based on exchange-traded gold coins and gold bar certificates. Investors can enjoy several advantages by investing in gold funds. Purchasing these funds is possible through brokerage trading systems.
Final Words:
In general, the best type of investment in gold depends on various factors such as risk tolerance, investment amount, financial expertise, and knowledge. Some individuals choose to buy decorative gold or second-hand gold because they can preserve the value of their money while using it personally. Others think about preserving the value of their money in the long term by purchasing gold bars, coins, and melted gold. Additionally, people with specialized knowledge in market analysis and finance can achieve good returns in indirect gold investment markets, such as gold coin and bar certificates and gold funds.
