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The ups and downs of gold...

It’s been exactly 12 months since financial fitness coach, Paul Roelofse, last spoke about gold as an investment option. Here are new insights.

Gold has always been a storage of wealth. The lustre of gold has attracted investors for centuries. Over the best part of the last decade, however, it seems to have lost its shine.

Peaking at levels around $1900 and ounce a few years ago to under $1100 of late. The big question is, “Will it be the safe haven when investors take flight from the stock markets and look for what has traditionally been their storage of wealth?

There are some very good reasons to consider gold as part of your portfolio.

The ups……..

There seems to be upside. It is has turned the corner from its low level in the $1000 an ounce range a year ago, to levels above $1200 presently. That’s around a 10% growth which points to a latent appetite for the precious metal, given the low returns and high risk in the markets over the same period.

The rand value of gold improves if our currency weakens. So if you are concerned about our rand sliding further into the abyss with all the political and economic problem we are facing, then you will certainly benefit.

The downs……..

The rand tends to surprise. Just when you think it is on a path to nowhere, it turns a corner, just like of late where it strengthened from R17,00 to the dollar heading toward R13,00.

Then just when we all thought it would break into range of R12,00 it spiked back up to mid R14,00. The currency is volatile which puts the investment of gold at risk.

Gold does not provide a yield. Therefore there is no opportunity for compounding returns into the future, which is how the growth on your investment is determined.

If you buy gold in the form of coins or exchange traded funds, then you rely entirely on the price movement and the currency differential. So it boils down to the rand price of gold over time.

Do your homework and take a longer view with gold. It does look attractive at the current levels given the aversion to risk which is taking place in the markets.

Listen to the full interview below for more information...

Read more from Paul Roelofse at www.investforlife.co.za

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