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For centuries, gold has been used as a form of currency and as a safe and effective way to protect your money. What the precious metal has not generally been, however, is effective income generating investment. Instead, it has been one safe havenespecially in time of inflation and economic turbulence, as has been the pattern in recent years.
But the price of gold has rallied so far this year, leading some investors to question the metal's unique income-producing characteristic right now. Is it worth investing in for quick profits, or are investors better served looking elsewhere? Here's what we'll break down below, starting with an analysis of the price growth gold has seen so far in 2024.
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Here's how much the price of gold has risen since January
The gold price has grown significantly since January 1, breaking numerous price records in the first months of the year. To start the year, gold was priced at $2,063.73 an ounce, according to American Hartford Gold. This cost has had ever since increased by hundreds of dollars, with the precious metal now priced at $2,355.88 for the same amount of the metal (as of May 14, 2024). That's a little more than a 14% price increase. So if you had bought at that opening price, you would have made hundreds (if not thousands) of dollars, depending on how much you bought and any profit you paid in the process.
But, if you haven't bought low, you may still have a chance to get in and make an odd profit. Because gold is known for its capacity inflation coverage (thanks to a stable price when other assets are faltering) and because inflation is still problematic (the next inflation report is due on Wednesday), demand for the metal is likely to remain strong, and the corresponding price will be competitive. However, due to the timely benefits of gold investment, it may not make sense to delay it either. Instead, start exploring your top gold options now to learn more.
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Why you should invest in gold now
While the ability to make a quick profit from gold is attractive, especially for a beginners, is not the only advantage the yellow metal offers investors. Here are two others to understand:
- A hedge against inflation: As noted, gold tends to perform well when inflation is problematic. This is due to their resistance to prices during these economic periods. The price of gold has risen after the release of inflation reports in each of the first four months of 2024. And with the next inflation report due out on May 15, investors should start now before the price becomes potentially prohibitive.
- A portfolio diversifier: Since gold tends to perform differently than traditional assets, it is considered a good way to diversify your portfolio. When added to a well-rounded portfolio, gold can help cushion the negative consequences that may be felt elsewhere. However, to improve gold's effectiveness as a diversifier, experts recommend limiting it 10% or less of its global portfolio.
The bottom line
With a rising price and the benefit of some protection against inflation, now is a good time to invest in gold. By acting now, investors could make quick profits (a rarity in the gold investment market) and can do so by effectively diversifying their portfolio at the same time. It has been noted that investing in gold is not suitable for everyone, so it is important to consider carefully pros and cons of this unique asset before starting.
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