Is gold a good investment for 2020

Buying Gold: What You Need To Know Before Investing

When stocks plummet, the price of gold rises - this observation earned gold the reputation of a crisis-proof investment. However, Gold 2020 is by no means a high-yield investment. In this article we explain to you what you should pay attention to if you want to invest in gold and give you tips for the right deposit.

Gold as a refuge in need

A look at the 2008 financial crisis seems to underpin the role of gold as a crisis currency. While almost all asset classes plummeted, the gold price rose from a good 900 US dollars to 1900 US dollars within two years. In the years that followed, the price fell again $ 1,048 in 2015. At the beginning of the corona crisis, many investors expected a rapid increase in the gold price, which initially did not materialize. Only in August did the value climb to one new high of 2048 US dollars.

But not all crises drove the gold price up. The gold price fell in the course of "Black Monday" - the first financial crisis after World War II - and also in 1989/1990 during the real estate crisis in Japan. The stable value or even positive development of the gold price during a crisis is therefore by no means guaranteed. On the other hand, gold is one of the oldest means of payment. Anyone who fears massive devaluation or a total failure of our payment systems could physical gold as security serve.

Investing in Gold: Costs, Risks, and Tips

Still, gold's biggest advantage remains its low or even negative correlation with other asset classes such as stocks and the US dollar. Its main disadvantage: Gold does not provide ongoing income like interest, dividends or rents. So earnings can only be achieved through a rising gold price after the purchase. In recent years, an investment in an ETF on the MSCI World has clearly outperformed an investment in gold.

In addition, gold is of little economic importance. Unlike silver or copper, for example, gold is rarely processed in industry. The jewelry industry only needs part of the available resources. Large quantities are stored in the vaults of the central banks.

In the Procurement, storage and security of gold lies another problem. If you buy gold, you should do so in larger units of weight, as the manufacturing costs for smaller pieces of gold are percentage higher. In addition, for the same reason, you should only invest in standard coins - such as Krugerrand - or bars. Collector coins are usually overpriced, and an increase in value above the gold price is pure speculation.

There are two options for storage: If you want to store the gold at home, there may be costs for delivery, security and insurance. These reduce your return on investment. You can also store gold in a safe deposit box or in a central gold depot - but this also incurs costs that reduce profit. TipBox Advance Block

The profits from the sale of physical gold are after a holding period of 12 months tax free. In addition, you usually do not have to pay VAT on gold.

Is gold overvalued? Scalable Capital podcast

In this episode, Money, Markets & Machines, the financial podcast from robo-advisor and broker Scalable Capital, takes a look at scientific research into the value of gold.

Clever alternatives to physical bars: ETC or ETF on precious metals

It is easier and usually cheaper to participate in the gold price if you invest in exchange-traded products such as ETFs or ETCs. The advantage: ETFs and ETCs have one compared to traditional bar purchases lower buying and selling spread. There are also no surcharges due, as mainly 12.5 kilo bars are traded.

You can purchase gold in the form of exchange-traded commodities (ETCs). A gold ETC is a bearer bond that is usually secured with physical gold holdings. Gold ETCs are similar to ETFs, but lack the diversification common to ETFs.

In Germany, there are no gold ETFs due to the legal framework created by the UCITS guidelines. The legal framework does not allow index funds with only one component to be set up. If you still invest in a gold ETF you need to invest in a more diversified commodity ETF; or an ETF that specializes in corporate gold stocks. In addition to stocks in companies that extract the metal directly from the mines (gold mining stocks), this also includes stocks in companies that finance gold mining companies (gold streaming stocks).

With the right depot for the gold owner

To be able to invest in ETCs or ETFs, you need a suitable custody account. The best thing to do is to take a look at our depot account comparison. At the top providers such as Smartbroker, Consorsbank and ING you will find, for example, the following ETCs and ETFs:

ETCs:

  • Invesco Physical Gold ETC
  • Xtrackers Physical Gold EUR Hedged ETC (WKN: A1EK0G)

ETFS:

  • iShares Gold Producers UCITS ETF USD (WKN: A1JKQJ)
  • VanEck Vectors ™ Gold Miners UCITS ETF (NASDAQOTH: A12CCL)
  • ComStage NYSE Arca Gold BUGS UCITS ETF (WKN: ETF091)
Tip: Differences in the taxation of ETFs and ETCs

In contrast to physical gold, with gold securities you pay withholding tax on a profit. Securities that are entitled to actual gold delivery (such as Xetra-Gold) so far tax-free after one year of holding. However, the federal government wanted to tax this stock exchange gold, according to a draft of the Annual Tax Act 2020. However, Federal Finance Minister Olaf Scholz withdrew: Profits from precious metal certificates remain tax-free for the time being.

It all depends on the right time

As is so often the case with investments, the right time is important when buying gold. That means: you should buy and sell countercyclically. Shopping when the price is low: This is usually when there is no crisis in sight and no one is talking about gold. And sell when everyone is talking about gold because the price is so high again. If you don't have a securities account yet, you should get one now. For example, you can put your money in less speculative securities until the time is right to invest in gold. In any case, gold should only ever be an admixture in the securities account.

A passionate editor. ETFs, online banking or death benefit insurance: Tim questions complex topics until he understands them - and then writes a service article.

Read the last articles by Tim Kempen:

A passionate editor. ETFs, online banking or death benefit insurance: Tim questions complex topics until he understands them - and then writes a service article.

Read more articles by Tim Kempen: