Gold has always been a popular investment option, especially in uncertain times. 2020 has seen a huge increase in gold investments in Australia and worldwide as the precious metal has proven its resilience in the face of the coronavirus pandemic, and many investors are eager to know more.
Like any financial decision, you should find out as much as you can about investing in gold and what the advantages and disadvantages are in your situation. To help you get started, here are the main pros and cons of investing in gold in Australia.
Reasons To Invest In gold
- Safe haven investment – the popularity of gold investing during COVID-19 is thought to be motivated in large part by investors relying on a reliable, tried and tested asset. Gold is and always has been highly in demand, and although gold values vary, the price falls are less drastic compared to those of the stock market, property and other common investments.
- Protection from inflation – as well as being dependable, investing in gold can also protect your wealth from losing its value during times of inflation – another reason for its popularity at the present time. Gold doesn't depreciate with currency, so investing your wealth in gold will retain or increase its value, rather than leaving it in a bank account where every dollar will be worth less and less.
- Diversifying investments – if you already have investments in stocks, bonds, property or other asset classes, adding gold to your portfolio will help to spread the risk, especially as gold is a low-risk option.
- Easy to get started – whether you want to buy gold or invest in the resources market, this is more straightforward and less hassle than choosing stocks or property, especially if you're new to investing.
Reasons Why Gold May Not Be Right For You
- Low capital gains – investing in Australian gold mining companies can be highly lucrative as the sector continues to boom, but buying gold tends to offer less substantial gains in the long term compared to shares or property (though also with substantially less risk). That said, gold prices are skyrocketing at present, so those who invested earlier in 2020 or before are enjoying the gains.
- No yield – unlike shares that pay regular dividends and property that can be monetised through leasing, there's no regular income stream from buying gold. The asset only yields a return on investment when you sell it.
- Managing gold – buying physical gold involves the hassle of securely storing and insuring the assets and having it authenticated when you buy and sell it. These aren't issues if you're investing in gold stocks.
Is Gold Investment Right For Me?
Only you can decide whether gold offers the benefits you're looking for from an investment, but in the current economic climate, there are fewer safer and more reliable options. With economic uncertainty expected to remain for some time, and Australia on course to become the world's leading gold producer by 2021, gold is forecast for further substantial price gains in the months ahead that investors can take advantage of.
Physical gold is not the only way to gain exposure to the gold price. ASX gold companies with strong operations and management are a valid route that many are considering.
Barclay Pearce Capital client AuStar Gold Limited (ASX:AUL) is an exciting gold exploration, mining and production company with a portfolio of historical, near term development and current assets based around the Morning Star Gold mine located approximately 120 km east of Melbourne in the Walhalla to Woods Point gold field.
The company is focused on the mining and production of its flagship Morning Star gold mine that has historically produced over 830k oz of gold. Additionally, AuStar has 670 km2 of exploration tenements covering the Walhalla to Woods Point dyke swam with historic high-grade production totalling in excess of 6 million ounces of gold.
Find out more about AuStar’s recent operations and production update Learn more here.
Read about the Morning Star Mine 8 Level Diamond drilling program here.
AuStar's vision is to become the next mid-tier gold producer in Australia.
Philip Amery, Chairman of AuStar Gold is available for an interview. Contact Donna Warner, Barclay Pearce’s Chief Marketing Officer: donna@barclaypearce.com.au
To keep up to date with their news and progress, and for more information about gold investment as a whole, subscribe to the AuStar Gold Chairman's List.
