What to know before investing in gold this fall

In recent years, the allure of gold investing has grown substantially, capturing the attention of both seasoned investors and beginners to the market — and this trend has only accelerated since the start of 2024. While multiple factors have contributed to the recent surge in gold investing popularity, one of the main drivers has been gold's impressive upward price trajectory.

The price of gold hit its first record high of the year in early March and has continued to climb ever since. Not only has it hit a handful of price milestones over the last few months, but it has also increased by over 22% since January. That type of return would be impressive for any investment vehicle, but it is particularly noteworthy for gold, which is generally a long-term investment. 

This substantial price appreciation has rewarded many existing gold investors with big returns on their investments. It has also attracted a new wave of investors who want to capitalize on the precious metal's price momentum, and you may be one of them. Before you invest in gold this fall, though, there are a few things you should know.  

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What to know before investing in gold this fall

Here's what to consider before diving into the gold market this fall: 

The upward price trend could continue

One of the primary considerations is gold's future price trajectory. While past performance doesn't guarantee future results, many analysts are bullish on gold's prospects for the remainder of 2024 and beyond, and several factors contribute to this outlook.

For starters, central banks worldwide have been increasing their gold reserves, as doing so can hedge against economic uncertainty and diversify their holdings away from traditional currencies. Retail investors have also shown increased interest in gold, partly due to its recent price performance and partly as a portfolio diversification strategy. This sustained demand could help maintain upward pressure on prices.

But those aren't the only drivers. Global economic conditions are uncertain and concerns about geopolitical tensions and other economic hurdles are looming. Because gold can serve as a safe-haven asset during more turbulent economic times, these conditions could potentially drive up demand for gold.

New gold discoveries have also become less frequent and mining operations are facing increasing environmental and regulatory challenges. This supply constraint, coupled with rising demand, could help push gold's price up even further.

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Physical gold is a good option, but it's not the only one

While owning physical gold can be a viable investment strategy, it's not the only way to gain exposure to gold. Take, for example, gold exchange-traded funds (ETFs), which provide an alternative that addresses some of the challenges of physical gold ownership. These funds are easy to buy and sell, much like stocks, and they typically have low transaction costs. 

Gold mining stocks could also be an attractive option, as they offer the possibility of dividends and may outperform physical gold in bullish markets. Experienced investors might want to consider gold futures and options, too, as these derivatives offer high leverage potential and can be useful for short-term trading strategies. 

Opening a gold individual retirement account (IRA) to prepare for retirement can also make sense. This type of IRA offers similar benefits to a traditional IRA, but it holds physical gold rather than more traditional assets. Gold certificates are yet another option. This type of investment allows you to own gold without the need for physical storage, as they're backed by allocated gold. 

Gold can offer benefits in nearly any economic climate

One of gold's most attractive features as an investment is its ability to provide benefits to a portfolio across various economic conditions. This versatility stems from gold's unique characteristics and its historical role in the global financial system. The traditional benefits of gold investing include:

• Inflation hedging: During periods of high inflation, gold often retains its value better than paper currencies, potentially protecting your purchasing power.
• Safe-haven properties: When stock markets are volatile or economic crises loom, investors often flock to gold as a safe-haven asset.
• Portfolio diversification: Gold typically has a low or negative correlation with other major asset classes like stocks and bonds, helping to reduce overall portfolio volatility.
• Currency devaluation protection: If the value of traditional currency declines, gold can act as a store of value, especially if priced in a stronger currency.
• Geopolitical hedging: In times of geopolitical uncertainty or conflict, gold often benefits from its status as a crisis commodity.
• Long-term value preservation: Over very long periods, gold has maintained its purchasing power, making it a potential tool for wealth preservation across generations.

The bottom line

The current gold market presents intriguing opportunities for investors, but you should approach any gold investment you plan to make with a clear understanding of the market dynamics, your available investment options and the role gold can play in your overall financial strategy. By carefully considering these factors and aligning your gold investments with your broader financial goals, you can make more informed decisions about adding gold to your investment portfolio this fall.