A Guide to Investing in Gold | Is it still profitable?



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A Guide to Investing in Gold | Is it still profitable?

By MJC97

Did you know that gold price is expected to increase more than RM300 per gram (g) in 2021? Hmm, I see that I have got your attention... 

If you are planning on entering the gold investment world after reading the first line of this article, well, we would definitely say that is a good choice. 

No idea where to start? Well continue on reading buddy, you’re going to learn a lot in this article.

Types of Gold Investment

1. Physical Gold

+ Gold bars

The first choice for experienced investors.  


Pros: High liquidity, easy to store, cheaper than gold coins, big profits

Cons: Higher risk of theft, no convenient option to liquidate

+ Gold coins

A more convenient and better choice for first time investors. 


Pros: Easy to store, easy to liquidate, higher value if rare

Cons: High risk of theft, could cost higher than gold bars – extra minting cost

+ Gold jewellery

Since most gold jewellery is not all pure gold, be sure to confirm how much carat is it. 


Pros: Can be worn as accessories, easy to buy

Cons: Low liquidity, higher risk of theft, high acquisition cost, cannot sell at the buy price

2. Gold mining stocks

When investing in stocks, you aren’t investing in the actual gold but in reality, the company that is performing the gold mining. So, your profits will really be depending on the company’s performance. 


Pros: Indirect exposure to gold performance, no physical gold (lower theft risk), lowi nitial investment, high liquidity 

Cons: Volatile and risky compared to others, profit depends on the company’s performance

3. Gold Exchange Traded Funs (ETF)

Here, you will be investing in the ETF that is backed by gold meaning that gold ETF is considered as a commodity ETF, and it reflects the overall gold price. 

Pros: Exposure to the gold performance, easily invest online, no risks of theft, no storage cost, high liquidity

Cons: Broker fee, not eligible for everyone, easily affected by other non-gold markets, volaile and risky compared to others. 

4. Gold Investment account

For this type of gold investment, you will have to open an investment account with a bank. You will be investing in gold with 99.9% purity without having to keep the physical gold. 


Pros: Invest is 99.9% pure gold, can easily invest online, zero risks of theft, no storage cost, high liquidity

Cons: No interest or dividen, not insured by PIDM, conversion fee, service fee if under required minimum balance

What factors influence the gold price?

1. Economic uncertainties & market sentiment

Most of the time, when an economic crisis happens, the gold price is always expected to go up. Most people choose to invest in gold when the economy is unstable and weakening as a way to limit their exposure to losses. 

2. The UD dollar

When the US dollar value weakend, the gold price will go up and vice versa. This is because gold is usually denominated in U.S. dollars.

3. Supply and demand

This is Economics 101. When the supply is more than the demand, the price will drop but when the demand is more than the supply, the price will increase. 


Overall, the pros and cons of investing in gold are:

Pros: increase value over time, protected against inflation, protected during times of crises, unique properties, low investment risk and increased demand over time

Cons: little industrial or commercial value, little utility value, a commodity, low long-term performance. 

Like everything else in this world, everything you do and every choice you make comes with a risk, so does gold investment. So before starting to invest, make sure you do your research about the current market conditions, your reasons for investing in gold and also what are your options for investing. Knowledge about somethings gives you power over it. Happy investing!

Investing in Gold A Guide to Investing gold price Gold Investment finance financial financial advice


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