Gold Prices Soar in 2024: Here’s How to Capitalize on the Surge

With record-breaking highs, gold shines as a safe-haven asset. Here’s what investors need to know before joining the rush.

Gold prices have been on a remarkable upward trajectory this year, with the precious metal’s value climbing over 30% and reaching an unprecedented peak of $2,748.23 per ounce. The dramatic rise has been driven by a mix of global economic uncertainty, geopolitical tensions, and recent policy moves, including the Federal Reserve’s significant half-point interest rate cut. As central banks in nations like China, India, and Turkey continue to diversify away from the U.S. dollar, the appetite for gold has only intensified. Retailers like Costco have also entered the market, stocking 1-ounce gold bullion bars and bringing the investment within easy reach of everyday consumers.

“Costco offering gold makes it as easy for a retail investor to buy gold as it is for them to buy household staples,” Joseph Cavatoni, senior market strategist for the World Gold Council, said, highlighting how accessible gold has become. But while investing in gold might look simple, there are crucial factors potential buyers should consider before jumping into the gold market.

Why Hold Gold?

Historically, gold has served as a hedge against inflation and a safe asset in times of economic volatility. During economic downturns, traders often turn to gold, seeing it as more resilient compared to other investments such as stocks, bonds, or currencies.

“Gold does well in moments of risk. If you look at market drawdowns or systemic events, that’s when gold really shines,” Cavatoni said. From 2008 to 2012, for example, gold’s value surged 101.1% as tracked by the Producer Price Index (PPI) during the financial crisis, a clear indication of the metal’s appeal in challenging times.

Getting Started: Understanding Your Goals

Before purchasing gold, investors need to clarify their objectives. Are they looking to diversify a portfolio or seeking a safe-haven asset? From there, they can determine if they’ll invest through financial instruments like gold-backed exchange-traded funds (ETFs) or purchase gold in its physical form.

Each approach offers distinct benefits and considerations. Physical gold, for instance, requires secure storage, handling, and insurance, while ETFs allow investors to buy and sell without the logistics of physical delivery.

“Delivery, storage, and safekeeping are all factors for holding gold in physical form,” Cavatoni noted. Another key factor for retail investors to consider is the “sticker price” of the bullion, which can include premiums that may not always reflect the spot market price of gold.

Choosing the Right Type of Gold Investment

When it comes to choosing gold investments, buyers have various options, from reputable brick-and-mortar dealers to online platforms. The form of gold is another consideration. Gold jewelry, for example, may carry added premiums for craftsmanship and design, which introduces further complexities compared to bullion or coins.

Gold-backed ETFs provide an easier entry point, sparing consumers the logistics associated with physical gold. “It’s just like buying a stock,” Cavatoni explained. “You can do that commission-free on many platforms these days, so it’s very cheap to get in and out.” However, some investors may still prefer holding physical gold as a tangible asset with long-term value.

Preparing for a Complete Investment Cycle

Cavatoni emphasizes a “round-trip mentality” for physical gold buyers. In addition to purchasing gold, investors should plan ahead for an eventual sale, ensuring they have a trusted partner or dealer when it’s time to cash in on their investment.

“When it comes to holding it for as long as you’d like and selling it, make sure you have a trusted partner that you can go back to and make that sale,” he advised. Investors are also urged to confirm the gold’s purity, whether purchasing bullion or jewelry, to ensure they’re getting the value they anticipate.

Caution and Due Diligence

Despite gold’s current surge, it’s crucial to act prudently when considering an investment. Even with Costco and other retail channels making gold more accessible, Cavatoni warns investors to take time researching, as rushing could lead to mistakes.

“If something sounds too good to be true, then it might not be true,” Cavatoni said. “Make sure you’re careful before you make the investment. You don’t need to rush into owning gold.”

Final Thoughts

As gold prices reach historic highs, investors are tempted to join the rush. Yet, understanding one’s goals, weighing the benefits of physical versus ETF gold, and ensuring a solid plan for both buying and selling are vital steps in making a smart investment. Gold may glitter, but sound investment choices will make it truly shine.