A Beginner’s Guide To Investing In Gold And Other Precious Metals

Investing can be difficult and perplexing, even in the best of circumstances, especially for those who intend to buy gold in Nigeria for the first time. Options and exchange-traded funds (ETFs) are just a handful of the many technical-sounding terms that are used in the industry. The distinctive feature of precious metals is their familiarity; they are also an age-old method of generating, preserving, and trading wealth. However, it rapidly becomes quite complex when it comes to incorporating precious metals like gold into your investments and overall wealth management, especially when it comes to gold buying in Nigeria.

We will provide a brief overview of the following in this blog:

• Who makes gold investments?
• Why make gold investments?
• The many approaches to gold investments
• Including gold in a diverse portfolio

Although we primarily concentrate on gold, most of the following also holds true for other precious metals, such as platinum and silver. But just as not all stocks in a given industrial sector perform the same, these other markets also have unique characteristics of their own.

Because silver has a smaller supply than gold, it is typically more volatile. Silver is more reasonably priced, but it has a varied industry demand, particularly in electronics, and storage expenses are greater. As you can see, when it comes to precious metals, it’s quite simple to become lost when choosing where to buy gold in Nigeria or how to diversify effectively.

Who Invests In Gold?

Many people select gold to diversify their investments and shield the remainder of their portfolio from danger. Few individuals would decide to put all of their money into gold since it’s always a good idea to have a balanced portfolio with a variety of investments. Gold is a popular choice among investors since it enables them to diversify into other markets. According to others, this is because gold prices are typically inversely associated with stock market prices, rising when other markets decline. Gold is therefore typically seen as a “safe-haven” investment. Investors shifting from “riskier” assets to the safe haven of gold contributes to the decline in equities and shares during periods of market turbulence.

Individually, a retail investor would rank quite low on the list, but taken as a whole, they hold 46% of all gold, mostly in jewelry. This explains why many people still choose to buy gold jewellery in Nigeria as an investment and a cultural asset. In Nigeria, gold also holds strong cultural and financial significance, particularly in jewelry ownership, gifting traditions, and long-term wealth preservation.

Why Invest In Gold And Other Precious Metals?

Strong and frequently divergent views exist about the inclusion of precious metals in a well-diversified portfolio. Nonetheless, the following are the most often cited justifications for those who desire to buy gold bars in Nigeria or precious metal investments:

• As a protective measure against deflation and inflation.
• Diversification of the portfolio.
• As a worldwide repository of wealth, particularly in times of socioeconomic and geopolitical turmoil.

Gold as a hedge against inflation: Due to its tendency to increase in value as living expenses rise, gold has traditionally been seen as a hedge against inflation. In the past, when inflation was strong, gold prices rise and the stock market declined. Because of this, gold is viewed as a means of preserving value during recessions and encouraging many people to purchase gold in Nigeria when their local currency weakens.

However, not everyone shares this opinion: “Gold can’t really be relied upon as a store of value over a more modest time period, even though research indicates that its value stays constant over an extremely long period of time, such as a millennium or two.” It’s just too erratic.

Gold as a deflation hedge: Deflation is characterized as a time when prices fall, corporate activity slows, and the economy is overburdened with debt. Because individuals decided to hoard cash throughout these periods, gold’s relative buying power increased while other prices decreased. Many people believe that holding cash in gold or gold coins is the safest option.

The Different Ways To Invest In Gold

Each of the two main methods of investing in gold and precious metals has advantages and disadvantages. They are:

• Physical gold (jewelry, sovereign coins, whole-minted bars, and fractions).
• Financial Instruments (e.g., ETFs, mining firms’ gold stocks).

Physical Gold

In general, a product’s cost beyond the metal’s spot price increases with the amount of effort required to create it. For instance, those who buy gold bangles in Nigeria or personalized jewelry typically spend more than those who buy coins or bars, which all require special design and marketing support, and will all retain value above the spot price. It becomes more difficult to forecast the performance in relation to the market price of gold, the more the physical gold is separated from the underlying product. For instance, even if your family treasure is valuable to you, a jeweler could only value it based on its weight.

The requirement to keep actual gold is its second drawback. It takes money to do it safely in a vault; keeping it at home carries a significant risk of loss due to theft or damage (the worth of coins is frequently dependent on their condition).

As provided by Goldy Jewellery, fractional gold is a very affordable and low-barrier-to-entry method of trading precious metals. We provide the choice of either physical delivery or safe storage.

Financial Instruments

Stocks of individual firms: A large number of mining companies are listed and accessible for investment. These are simple to investigate, but they carry the same risk as any strategy involving specific stock selections. Because of this, funds that concentrate on precious metals offer a level of diversity that many investors find intriguing.

Exchange-traded funds and precious metal mutual funds: There are two main categories of funds that invest in precious metals: those that invest in mining companies and those that invest in the underlying actual metal itself.

Since futures contracts are usually of little interest to individual investors, we shall disregard them for the purposes of this blog.

Gold To Diversify A Portfolio

Most people agree that alternative assets and precious metals like gold are crucial components of a balanced portfolio.

The process of learning about and investing in precious metals may be rather simple, regardless of whether you intend to invest in bullion or buy gold necklace Nigeria to preserve value. In Nigeria, investors may purchase fractional gold, silver, and platinum with Goldy Jewellery, along with access to individual stocks and exchange-traded funds. In the near future, the entire bar and coin investment will also be included.

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