Gold has held its value for hundreds of years and because of this, its seen as a tangible asset into which investment can be stored and preserved for future generations.
Investment in gold often increases in value during difficult economic times and when there is a risk of higher inflation. This is because the value of gold is not usually affected by the performance of other investments.
Gold is a precious metal which occur naturally as grains in rocks, and in alluvial deposits. It is a finite, unique and scarce natural element.
Importance Of Gold Investment
CEO of Greenville Capital Limited, Azeez Bello says, over the past 20 years, the ground stock has only grown at a rate of 1.7 per cent, adding that, a total of 197,576 tonnes of gold exists above ground, as of 2019.
“The US Treasury is the largest known single holder of Gold but only owns four per cent of all above-ground stocks. US Bullion Depository in Fort Knox holds approximately 147 million ounces of Gold. Almost 50 per cent of above ground Gold is in form of Jewellery while 21 per cent is owned by a large number of institutional and individual investors in the form of bars, coins and gold ETFs.
“Gold has served as a means of exchange, a store of value and unit of account for more than 3,000 years. Across the globe, it is also significantly utilised for investment and consumption. As a consumer good, the significant demand for gold jewellery is apparent in countries like India and China because it has roots in their cultural and religious beliefs,” he states.
How To Invest In Gold
In general, investors looking to invest in gold directly have three choices: they can purchase the physical asset, they can purchase shares of a mutual or exchange-traded fund (ETF) that replicates the price of gold, or they can trade futures and options in the commodities market.
According to Bello, investors can allocate capital to Gold via different avenues. The most available structured Gold derivative product in the capital market today is the New Gold Exchange Traded Fund listed on the Nigerian Stock Exchange.
The net asset value of New Gold ETF was reported to have grown by over 900 per cent within year 2020. Where Gold mining stocks are listed on the bourse, investors can also take position to benefit from such companies.
“Hitherto the gold market and business in Nigeria has been largely informal. However today, there are now opportunities for investors to purchase and sell physical gold bars, cubes, wires, sheets and coins through licensed commodity brokers. In the days ahead, Gold is expected to be a tradeable commodity on all commodities exchanges in Nigeria,” he points out. Source: Personal Finance Insider