Goldman says go for gold. Here are 5 Things To Know Before Investing In Gold.

 

Gold investment

 

Gold investment: Goldman says go for gold; sets a target of $3,000 by next Christmas

 

In a report on business today, Goldman Sachs analysts predict that gold prices will reach new heights in 2025 due to increasing central bank demand and anticipated US interest rate reductions.

 

The investment banking firm believes that a potential second term for President Trump could positively impact gold prices, especially in light of increasing geopolitical tensions and concerns about US fiscal stability.

 

Before you decide to either invest in Gold or not , here are 5 things to know about Gold investment. 

5 Things to know before investing in Gold.

 

1.       1. Gold and the dollar sometimes have inverse relationship.

 

 The gold price and the trade- weighted US dollar can have an inverse relationship.

 

What does the trade-weighted show?

 

The trade-weighted value shows how US dollar gains or loses purchasing power against its trading partners.

 

Note, this relationship is no longer as accurate as it used to be in the  past under the gold standard.

 

2.     2.    You pay a premium when you buy a physical gold.

 

When you buy a gold coin with an ounce of fine gold from a dealer or a bank, you pay more than the gold price. The difference is called the premium.

 

3.      3.   You pay tax on collectible rates on physical gold.

 

Physical holdings in gold and other precious metals are considered as collectibles.

 

These holdings attract capital gains tax which is owed after you sell your holdings in gold.

 

This capital gains tax is is equal to your marginal tax rate up to a maximum of 28%.

 

4.    Physical gold is different from Gold stocks.

 

Gold stocks offers higher liquidity because they can easily be traded on public exchanges.  

 

But in period inflation spiral, physical gold provides more security and long-term stability.

 

Investing in either gold stocks or physical gold comes down to your risk tolerance.

 

5.    An investment in Gold does not provide consistent returns.