All over the news nowadays is the US-China Trade dispute and how it is going to affect investors. The Federal Reserve’s interest rate policy has also led to rising concerns among the masses. Hence, when the stocks slid for the first time in six days, CNBC’s Jim Cramer advised shifting away from stocks and to start investing in gold.
Why the Shift?
The stock market has been stable since the Feds decided to be more patient with the monetary policy, but it is always better to have diversified investments as a backup plan for the future uncertainties. Jim said, “If you’re looking for an insurance policy against volatility and economic uncertainty, buy gold is a great way to go.” He said this when the metal was trading almost at $1,288 an ounce on January 11th. This was a slight increase against the 5% gain of December’s sell offs.
The Wise Investor
Having said this, buying physical gold in the form of bars or coins has not been recommended. The risk and efforts involved in storing actual gold are not worth the exposure. In financial terms, most gold is sold with significant mark-ups by the dealers. This makes it a non-profitable deal when you head out to sell liquid gold. Even selling a gold coin through a brokerage account is not that easy.
Instead, it is better to direct your money into the SPDR Gold Shares Fund, a gold-mining ETF or to the stocks of a renowned gold-producer such as Barrick Gold. Each of these options comes with their own perks. The former lets you invest in actual gold that they own themselves, thus reducing your risk and inconvenience. A gold-mining Exchange Traded Fund brings together all other risky mining stocks to hedge against the collective risk.
The Golden Merger
The most attractive though, is Barrick Gold. It recently acquired Randgold Resources, that increased its favouritism among the investors. The combination of these two companies is just perfect and many people are eagerly waiting to see the outcome. The host of the show ‘Mad Money’ was quoted saying, “The Company has the lowest total cash costs among its peers — I like that — [and] it has a nicely diversified portfolio of assets across the world — I love that.” Having said this, it is still suggested that waiting until Barrick’s first quarter report as a combined company is out would be sensible.
The Step Forward.
But the hesitation to switch lanes is still there. With the world economic situations getting tense every day, it is difficult to decide what is best. Though it may not be the apt time to buy gold, it is always advocated to have a cushion to fall back on during financial troubles.
While it may not be the best time to branch out into other investment options, gold always proves to be of great help during chaos and rainy days. However, it is alright to be concerned about your portfolio, and going for a GLD, gold-mining ETFs or the Barrick Gold are equally good options.