Outlook for gold prices continues to be bullish

Outlook for gold prices continues to be bullish

Historically speaking, gold prices have more than quadrupled since the turn of the century and the appeal of commodities as a safe haven is undiminished. Not only have the gold investments yielded higher returns compared to other asset classes, but it is relatively easy to buy and sell. With returns on stock markets and property investments looking increasingly uncertain, more and more people are buying gold as a hedge against inflation.

How to invest in gold

There are various ways to invest in gold, but the easiest and the most conventional is buying physical gold coins, gold bars or gold jewellery from a jeweller.

Another way is buying World Gold Council coin, issued by jewellers who are part of the World Gold Council network. Then there is the choice of buying bars of gold bullion, an excellent — if expensive — investment which is beyond the means of many common investors.

Gold Exchange Traded Funds (ETFs) are also a hot option in the current climate. Operating like mutual funds, ETFs invest exclusively in gold and are proving an easier and safer way to buy the precious metal. Not only are charges less, but the gold can be accessed electronically. The disadvantage is that the owner never gets to actually see their gold.

The next step for an ambitious investor is investing in gold futures via exchange traded contracts through registered brokers. Futures contracts on the Dubai Gold and Commodities Exchange (DGCX) have inbuilt delivery options, and are a good way to make money from the fall, as well as the rise of gold.

“Investing in gold though futures and options also provides high leverage and helps to take advantage of the short-term and medium-term price movement,” explained Pradeep Unni, senior relationship manager at Dubai-based commodities trading firm Richcomm Global Services DMCC.

“Futures contracts also give an exclusive opportunity to short sell in order to take advantage of the downtrend in prices.”

For trading/investing in gold futures contracts one needs to open an account with a registered broker and submit documents.

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