Is It Prof­itable to In­vest in Gold?


If we take a closer look at gold, we will see that this pre­cious metal al­ways en­joys de­mand, Valery Polkhovsky, a se­nior an­a­lyst at FOREX CLUB Group of Com­pa­nies, said in an in­ter­view with the Econ­omy of Be­larus Mag­a­zine.

There are pe­ri­ods when prices for gold go down but they swiftly re­cover to the pre­vi­ous max­i­mum. It is un­likely that this his­tor­i­cal trend will be bro­ken. The price per troy ounce of gold in 2017 will be about $1,300-1,400. In the next 10 years we may see it hit the mark of $1,900, as was the case in 2011, Valery Polkhovsky noted.

Dur­ing the global eco­nomic cri­sis, in 2008 the gold was in great de­mand as an as­set-pro­tec­tion tool. Back then the U.S. Fed­eral Re­serve Sys­tem launched a QE pro­gram (to bail out large cor­po­ra­tions, banks and pri­vate en­ter­prises by buy­ing back their dis­tressed debt). With fears of hy­per­in­fla­tion run­ning high, many turned to gold as an as­set-pro­tec­tion tool. As a re­sult, the price grad­u­ally rose to $1,900 per troy ounce. “Once the hy­per­in­fla­tion fears were al­le­vi­ated, gold went down in value and to­day this pre­cious metal costs $1,200 per troy ounce,” the ex­pert said.

Still, is gold an in­stru­ment to pro­tect your wealth or mul­ti­ply your money? Valery Polkhovsky pointed out that ev­ery­thing de­pends on the time this as­set is pur­chased and sold. “Let’s as­sume you de­cide to sell the gold that you bought at $1,900 per ounce in 2011 at to­day’s price of $1,200. You will hardly be happy with the deal. How­ever, if you had bought gold be­fore 2011 when the price was $800, you would have a 50% profit now,” Valery Polkhovsky said.

In gen­eral, it takes time for gold to pro­duce in­vest­ment in­come. This is why gold is con­sid­ered, first of all, as an in­vest­ment rather than a spec­u­la­tive in­stru­ment. The gold spread (the dif­fer­ence be­tween the buy­ing and sell­ing prices) is much higher than that in the for­eign cur­rency trade.

Valery Polkhovsky stressed that gold is not the most pop­u­lar in­vest­ment in­stru­ment in Be­larus.

Gold is not the most pop­u­lar in­vest­ment in­stru­ment in Be­larus

“When you buy a gold bul­lion from the Na­tional Bank of the Repub­lic of Be­larus, most likely you will be able to sell it only to the Na­tional Bank of the Repub­lic of Be­larus. You will en­counter dif­fi­cul­ties sell­ing the gold abroad, since for­eign banks rarely ac­cept gold bars is­sued by a dif­fer­ent bank. By the way, in the Rus­sian Fed­er­a­tion, this in­vest­ment in­stru­ment is even less pop­u­lar due to a num­ber of fac­tors. For in­stance, bul­lion bars are sub­ject to VAT in Rus­sia,” Valery Polkhovsky ex­plained.

There are pe­ri­ods when prices for gold go down but they swiftly re­cover to the pre­vi­ous max­i­mum

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