Possibly, investing in gold is the oldest way to protect assets, since the metal has been used since antiquity as a store of value. Even with the evolution of times and with several sophisticated investment alternatives, the fact is that, in times of crisis and instability in the economy, the demand for gold increases historically.
Proof of this is the appreciation of the metal in the first year of the pandemic, whose quotation reached the historic mark in August 2020. At the time, it reached US$ 2,021 a troy ounce (weight unit equivalent to about 31 grams), accumulating an appreciation of 56% in the year. Times later, the quotation gradually began to fall, until it again gained strength with the war between Russia and Ukraine, again surpassing the US$ 2,000 mark in early March 2022.
In recent times, investing in gold has become more accessible, which makes it easier to diversify and protect investments. But after all, is it worth investing in gold? And how can this be done? To find out the answers to these and other questions, continue reading below.
Is investing in gold a good deal?
Gold has some characteristics that make it one of the most sought after assets when it comes to protecting assets. One of them is the fact that its quotation is not directly related to factors that affect the financial market of a country.
For example, at certain times, it is possible to perceive high volatility in stocks, real estate funds or other variable income assets without the same happening with the price of gold. Therefore, it is often said that its correlation with the stock exchange is relatively low.
Another aspect linked to gold concerns its international reserves. Officially, the gold standard (backing fiat currencies) was abandoned shortly after World War II. However, many countries still maintain high reserves of the metal, as a form of financial protection against inflation.
In times of turbulence in the economy, demand for the metal usually increases, precisely because of the security it offers at these times. In this way, its price ends up rising, to retreat again when the economic scenario begins to return to normal.
In short: it can be a good deal to invest in gold. However, in order to take advantage of its advantages, it is necessary to evaluate the most favorable moment to do so. In this sense, some experts note that the metal loses attractiveness when interest rates are higher, since, in that case, there are other investments that provide more gains.
In the case of fixed income, rising interest rates favor prefixed bonds. As for variable income, there are stocks that also benefit from high interest rates, such as banks and insurance companies, for example.
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Disadvantages of investment
On the other hand, there are also points that deserve attention when talking about investing in gold, and one of them is its volatility. As we have seen, in times of low demand for the metal, its price tends to fall, as with any other asset that has reduced demand.
Depending on the economic scenario, this may represent losses in the short or long term. Therefore, the ideal is to always count on gold for the long-term portfolio.
Another aspect to evaluate is the fact that gold does not provide periodic cash inflows, like other types of assets. Therefore, it is not a suitable alternative for those who have a passive income strategy with investments.
How to invest in gold?
In addition to physical gold, there are other ways to invest in the metal, as we will see below.
Although this is the most well-known way of investing in gold, it is not practical or safe to purchase bars of the metal to keep them in storage. Firstly, it is a bureaucratic process, as the purchase needs to be authorized by completing a registration form. In addition, only financial institutions authorized by the Central Bank can trade the metal.
Once the purchase is made, it’s time to find a bank to take custody of the gold, and that also involves costs. Finally, physical gold is not so easy to sell at any time, which affects the liquidity of the investment.
Exchange Traded Funds (ETFs) are a good alternative for portfolio diversification. Basically, the purpose of an ETF is to replicate a certain index or financial asset, and you can invest in gold through these funds.
On the Brazilian exchange, you can find the GOLD11 gold ETF. Created in December 2020, the Trend ETF LBMA Ouro Fundo de Investimento de Index – Investimento no Exterior (full name of the fund), follows Blackrock’s iShares Gold Trust ETF, listed on the New York Stock Exchange (NYSE). Its purpose is to reflect the price of gold in bars.
Gold ETF BDR
B3 also offers ETF BDRs, assets that also offer good diversification potential.
Brazilian Depositary Receipts (BDRs) are securities issued in Brazil that can be backed by shares of foreign companies or by ETFs. In the case of gold, one of the alternatives is the BIAU39, which replicates the performance of the American ETF iShares Gold Trust (IAU), which reflects changes in the price of the metal.
With BIAU11, in addition to investing in gold, your resources are dollarized. That way, in addition to changes in the value of the share, you will also be exposed to the exchange rate variation of the asset.
BRD of companies operating in the sector
On the Brazilian stock exchange, we have the BDR of Aura Minerals (AURA33), a Canadian company that operates in the mining of metals such as gold and copper, mainly in the Americas.
That is, by investing in AURA33, you are indirectly participating in the company’s results, since this BDR is backed by your shares. It is different from the BIAU 39, whose objective is to follow an ETF that, in turn, replicates the price of the metal.
The logic of gold funds is the same as that of other investment funds, that is, it involves raising funds to form common equity and distributing it in shares. However, in this case, the manager allocates the resources in gold or assets that represent the metal.
Depending on the regulation and policy of these funds, they may or may not have exchange protection, as well as variations in the minimum entry and movement amounts.
gold futures contracts
Futures contracts, traded on B3, are also a possibility to invest in the metal. Basically, this operation includes the trading of a certain volume of gold maturing on a future date and for a predetermined price.
Those who use futures contracts aim to profit from changes in asset prices or simply protect themselves from possible devaluation. Another peculiarity is that, in these operations, settlement is usually only financial. In other words, there is no delivery or receipt of the metal, only a credit or debit in the account that conforms to the fluctuations in the price of gold.