Gold remains No. 1 precious metal hedge asset
Global inflation has seen a steady uptick on the back of supply chain disruptions that started since the COVID-19 global pandemic.
Today, major economies across the world are doubling down on measures to beat historical inflationary trends. In the UK, inflation hit a 40-year high in April. In the US, inflation is at a 41-year high, forcing the federal reserve to raise interest rates by 0.75 percentage points, the third hike this year and the largest since 1994.
Africa is not left out. Ghana’s inflation is at the highest in a decade and Nigeria, Africa’s largest economy is battling a 17.71% inflation and biting food inflation, which rose by 19.5% in May.
For investors, this is a nightmare as they continue to scout for strategies to hedge against inflation and ensure a positive real rate of return. Many investors are returning to the age-long strategies of betting on precious metals to hedge against these inflationary trends.
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At the top of the list of these precious metals is Gold, which many have considered the most valuable precious metal.
This article will focus on how you can invest in gold. Below are three ways you can safely buy gold if you truly want to beat inflation.
1. BUY PHYSICAL GOLD
People can invest several ways in gold. However, the one that appeals to the majority of investors is buying actual physical gold. As a commodity, an investor can buy gold in form of jewellery off the shelves of a jewellery store. Investors can also buy gold bars or coins from precious metals dealers, banks or brokerage. Recent reports have shown that small bars and coins accounted for approximately two-thirds of annual Gold investment demand and around one-quarter of Gold’s global demand over the past decade.
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2. BUYING GOLD ETFs
Aside from buying physical gold, another way to invest in gold is by investing in exchange-traded funds (ETFs) that hold gold as their underlying asset.
ETFs collectively hold more than 2,000 tonnes of physical gold on behalf of investors around the world.
In Nigeria, the NEWGOLD ETF that is traded on the Nigerian Exchange Group is a major gold ETF that is open to members of the investing public.
3. BUYING GOLD MINING STOCKS
Sometime in August 2021, an oil and gas company in Nigeria transitioned into gold mining and subsequently traded its shares on the Nigerian Exchange Group. That company is called Japaul Gold and currently offers investors an opportunity to invest in Gold through its gold mining stocks.
Gold mining company stocks may correlate with the price of gold. However, the growth and return in the stock depend on the expected future earnings of the company, not just on the value of Gold.
Click here to read more on valuable precious metals.