3 smart gold moves to make this September
Gold is grabbing headlines again as we enter September 2024. After hitting a new record of $2,509.28 per ounce in early August — and then climbing to over $2,525 per ounce a couple of weeks later — while maintaining significant gains this year, it's clear why investors are taking notice.
That said, there are expectations that the Federal Reserve will drop interest rates soon, which is happening at a time when we're still wrestling with stubborn inflation and watching global events shake up markets. These factors often push investors to rethink their strategies. Gold, long seen as a safe-haven asset during uncertain times, naturally becomes part of the conversation.
This September, making smart gold moves could impact your portfolio's performance. Let's see what financial experts are saying about it in today's money climate.
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3 smart gold moves to make this September
"We just broke new highs in gold, and it's very possible for it to go higher in the last two quarters of 2024," says Alex Ebkarian, COO and co-founder of a precious metals dealer, Allegiance Gold. Ebkarian cites potential interest rate cuts, increasing demand in Western markets and growing geopolitical risks as key drivers for higher gold prices. With central banks boosting their gold reserves and more investors turning to gold ETFs, the momentum seems strong.
It's worth noting that most experts recommend limiting your portfolio's gold allocation to 5% to 10% for portfolio diversification. The percentage varies based on your financial situation and goals.
Now, let's explore three smart gold moves that could strengthen your portfolio:
1. Diversify with gold ETFs
Kevin Shahnazari, founder and CEO at FinlyWealth, a platform that provides bespoke financial solutions, points out that many of his clients prefer gold ETFs over physical gold due to their better liquidity and lower costs.
"One client increased portfolio stability by allocating 5-10% to a mix of gold ETFs," Shahnazari says. This approach lets you benefit from gold's potential without the hassle of storing physical gold.
Here's a simple roadmap if you're considering this move:
- Research well-known gold ETFs like SPDR Gold Shares or iShares Gold Trust.
- Compare their expense ratios and trading volumes.
- Decide on your allocation — typically up to 10% of your portfolio.
- Open a brokerage account if you don't have one.
- Place a buy order for your chosen ETF.
- Set up regular portfolio rebalancing to maintain your desired gold allocation.
Tip: Start small and adjust as you get more comfortable with this investment approach.
Find out more about the many benefits of gold investing here.
2. Consider gold mining stocks
Gold mining stocks offer another exciting way to tap into the gold market. These stocks can give you extra bang for your buck, as they often move more dramatically than gold prices themselves.
"These can leverage off the price of gold. A smart play would be to look for companies with strong financials that run well and efficiently," says Shahnazari.
If you're willing to take on more risk for potentially higher returns, he suggests allocating 2% to 3% of your portfolio to mining stocks. Under his guidance, one of his clients invested in Newmont Corporation when the gold price was rapidly rising.
"This gave her a return of 30% over six months — outpacing the performance of physical gold by that time," Shahnazari says.
Remember: While these stocks can offer great rewards, they also come with higher risks. Do extensive research and invest wisely.
3. Explore digital gold-backed currencies
September could be the perfect time to consider a fresh approach to gold investing: digital gold-backed currencies. These assets combine gold's enduring value with blockchain technology's efficiency and accessibility.
Shahnazari has witnessed the benefits of these modern investments for his tech-savvy clients.
"A small business owner I worked with invested in PAX Gold Tokens (PAXG). This allowed him to own gold in small amounts and trade it anytime, fitting seamlessly into his busy lifestyle," Shahnazari says.
This fusion of a traditional asset with new technology offers unique advantages. Investors can buy, sell and trade gold with the same ease as sending a message on their phones. If you're comfortable with digital platforms and are looking for a flexible way to invest in gold, these currencies could open up new possibilities this fall.
The bottom line
As you consider gold moves this September, think long-term. Mike Minter, certified financial planner at Main Street Financial Solutions, cautions that gold shouldn't be a short-term investment because it can be volatile. "With the U.S. national debt now over $35 trillion, I'd keep an eye on inflation and the value of the dollar," he says. When inflation rises or the dollar weakens, gold assets typically become more appealing to investors.
Before you get into gold investing, assess your overall financial picture. Don't try to time the market or go all-in on gold. Instead, add it gradually to your portfolio, keep your allocation in check and look into other precious metals worth investing in.
