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For much of 2024, gold seemed unstoppable. The price per ounce rose steadily from $2,063.73 at the beginning of the year to more than $2,700 by the end of Octoberwhich paved the way for what many investors saw as a golden era. The rapid rise was not just a reflection of gold’s traditional role a protection against inflation or economic uncertainty – it also attracted a wave of new investors, lured by the prospect of short-term gains in an asset typically seen as a long-term game.
However, in early November the wind changed. The price of goldwhich was at a near-record high of $2,736.35 per ounce at the start of the month, experienced a sharp correction, falling around 6% within days to settle at $2,574.79 per ounce. This drop in value has left some investors wondering if this was the start of a bigger decline or just a healthy correction in a market that may have overheated.
While uncertainty clouds the short-term outlook, it is essential to remember that Gold often thrives on volatility. Such a dip can provide an excellent opportunity for strategic investors to enter the market or diversify their portfolios. And with gold prices lower than recent highs, certain gold assets may now be more attractive than others. So what types of gold investments make the most sense during a price downturn?
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Which gold assets should you invest in now that the price has fallen?
There are several options that can help you take advantage of today’s lower gold prices while positioning yourself for potential gains when the market recovers, including:
Physical gold bullion
If the gold price falls, physical gold is becoming an obvious starting point for many investors. Buying gold bullion – meaning gold bars or coins – is a simple way to own tangible assets. The recent price drop makes it more affordable to acquire physical gold, which is very high valued for its liquidity and universal acceptance, so buying now could mean you get a bargain on your purchase once the price rises again. Physical gold is also not dependent on the financial markets or the performance of companies a safe haven during economic turbulence. It is also easy to sell, allowing investors to quickly liquidate their holdings if necessary.
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Gold ETFs
Gold exchange traded funds (ETFs) offer an efficient way to invest in gold without having to deal with the hassle storage and security issues that come with physical gold. These funds track the price of the metal and allow investors to buy and sell shares in the stock market, making them an easily accessible option as purchasing them can usually be done with an account on an investment platform.
This price drop makes gold ETFs are particularly attractivebecause investors can buy shares at a lower cost and potentially benefit from future price increases. Gold ETFs also offer flexibility and liquidity, allowing investors to quickly adjust their holdings based on market conditions. And for those hesitant to handle physical gold, these types of ETFs provide an excellent balance between convenience and exposure to gold’s performance.
Gold mining stocks
Invest in shares of gold mining companies can be an indirect way for investors to profit from gold price movements. After all, these types of companies often see their stock prices rise and fall in tandem with gold prices – but they also benefit from operational efficiencies and other factors that can boost profitability.
This gold price drop creates an opportunity to also buy mining stocks at potentially undervalued levels. If the gold price recovers, these stocks will rise can experience greater gains compared to the physical good. However, keep in mind that mining stocks come with additional risks in terms of management, production costs and geopolitical factors. So thorough research is essential before making a purchase.
Gold royalties and streaming companies
Royalty and streaming companies are another attractive option to consider as gold prices fall. These companies do not mine gold directly, but instead finance mining projects in exchange for a share of future production or revenue. This model offers them stable cash flows and lower operational risks compared to traditional mining companies.
Royalty and streaming companies often perform well during periods of gold price volatilitybecause their income depends on production volume and market prices. They are also less affected by rising mining costs, making them a relatively stable choice during price fluctuations. By buying into these companies now, investors can safeguard their profits when the gold price recovers.
The bottom line
The recent decline in the price of gold reminds us that even the most stable assets experience fluctuations. However, this decline does not necessarily mean problems. Instead, it offers an opportunity to reevaluate your investment strategy and consider adding gold to your portfolio at a more favorable entry point. Whether you prefer the tangibility of physical gold, the convenience of gold ETFs, or the growth potential of gold mining stocks, there’s an option right now that fits every investor’s goals and risk tolerance.
