How Many Grams of Gold Should You Buy as an Investment?

Gold prices reach an all-time high
A safe asset
Methods of investing in gold

The price of gold hit a record high on Friday.

The international gold price broke through the $2100 mark on Thursday, and in the aftermath, the spot price of 1 kilogram of gold was trading at $68.9 on the KRX Gold Market. This is the highest price since the exchange began trading in March 2014.

On the Korea Gold Exchange, an ounce of pure gold (3.75 grams) costs $253.5 to sell and $293 to buy.

According to experts, gold futures traders have led the rise in gold prices by betting that the Federal Reserve (Fed) will lower interest rates from the second half of this year.

In addition, the recent surge in Bitcoin, which has a large fluctuation line, has drawn attention to the gold investment.

Gold is a representative safe asset that can be universally accepted as an unchanging value anywhere in the world, regardless of time. It is recognized as the best product when the international economy is in a recession, such as a decline in the value of the US dollar and inflation.

There are usually three ways to invest in gold.

First, simply buy gold bars. You can purchase gold bars with a purity of 99.99%, certified by the London Bullion Market Association. They can be bought in banks, gold and silver stores, home shopping centers, and online. Prices vary by seller, so it’s important to compare prices. Gold is a safe investment as it is a physical asset.

You can exchange it in units of 100g, and a fee is charged.

Experts recommend buying 1kg and 100g gold bars. Especially for 100g bars, there is an advantage that only a portion can be sold when gold prices rise. It can be traded at commercial banks, but the fee is 7.2% (including VAT) and 5% at the gold exchange, so trading at the gold exchange is recommended.

They also say that it should be stored well so that the gold bar doesn’t get scratched, making it possible to resell later.

Next, you can sign up for a financial product that allows you to freely accumulate gold, like a savings account, without owning a gold bar. It’s commonly called “Gold Banking” or “Gold Account.” For example, if the price of 1g of gold is $22.78 and you pay $45.56 to the bank, 2g is accumulated in your account. However, unlike general deposit products, it has the disadvantage of not being covered by the Deposit Protection Act.

The third is to join a fund. You can join domestic and foreign Exchange Traded Funds (ETFs). It involves investing in gold-related companies. If the price of gold rises, the share price of the gold mining company also rises, allowing you to make a profit. Conversely, if the price of gold falls, a loss may occur.

According to the financial sector, the number of accounts for gold-related products is increasing yearly.

KB Kookmin Bank, which opened the “KB Gold Investment Account” commodity, recently announced that the cumulative number of the accounts as of last November was 62,885. This is an increase of 4,926 accounts compared to last year.

However, experts say one should not indiscriminately invest because the gold investment is safe, and the gold price is high.

They pointed out, “Gold is a safe asset, but at the same time, it is a highly volatile asset. Even if the price of gold rises, if the value of the Korean won falls, the actual return rate may be lower than the increase.”

The price of gold showed a downward trend until last month. Under the influence of the weak trend, the gold fund also recorded a poor return rate. The return rate as of February 19 was -6.82%.

However, as the price of gold rose, some South Korean funds rose more than 2% as of the 5th compared to the end of last month.

Due to such volatility, experts say, “It is good to invest carefully considering exchange rate fluctuations, etc.”