Gold is an excellent investment option due to its low volatility and history as a safe haven. However, there are some drawbacks to investing in gold. Gold does not pay dividends or interest, and its value is very sensitive to the yield of bonds, which means that higher bond yields can increase the value of gold.
Investor psychology is also affected by temporary futures-driven gold-price distortions. During the recent upleg, speculators started buying to cover their gold-futures shorts near the lows. While this practice is legal, it does not yield substantial gains since short-covering often lasts only a few months. Nevertheless, it helps push gold prices higher, which is what long-side speculators want.
If you own physical gold, you should store it in a safe place. This can be done by renting a safe deposit box or adding a home safe. However, you must be aware of the costs associated with secure storage, so do some research and choose a location that is secure. Moreover, you should consider insurance when it comes to gold, as it can help keep it safe.
Another way to invest in gold is by purchasing stock shares of mining companies. Purchasing shares of gold mining companies allows investors to access their profits, and can protect them from declining gold prices. However, this type of gold investment requires a large amount of research, as there are many risks and ethical concerns involved in the mining industry.