Gold has been a valuable asset for thousands of years, and today, it remains a popular investment choice. Not the kind you get from winning an Olympic medal (though that would be pretty cool, although it’s just over 1% real gold), but the shiny metal you can invest in. But why should you, as a high schooler, consider gold as part of your investments? Let’s get into some key facts about investing in gold and why it might be a good idea for your future holdings.
Why Gold?
Gold has always been seen as a “safe haven” investment and is sometimes considered an inflation hedge though the inflation-hedge correlation is subject to debate. When other assets, such as stocks or real estate, are doing poorly, gold often holds its value or even increases in value. In turn, this makes gold the “Michael Phelps” of investments – always reliable and always valuable. To top it off, gold is a physical asset that you can hold in your hand, unlike digital stocks or bonds.
My family has a tradition of passing down gold jewelry through the generations. Every time I see a necklace or bracelet made of pure gold passed down to my mother from my grandmother, I’m reminded about how these pieces have been cherished and valued for a long time. It’s not just about the monetary value but also memory. Investing in gold can feel like that—a way to hold onto something valuable and meaningful for the future.
Historical Performance
Did you know that gold has been around for centuries?
From the 3rd century BC to the 3rd century AD, gold was recycled in the Roman Empire and was used as currency. Throughout the years, gold has been a reliable investment. For instance, between 2000 and 2020, the price of gold increased from around $300 per ounce to over $1,800 per ounce. That’s a very large increase, showing that gold can be a strong performer over the long term. However, it’s important to remember that past performance doesn’t guarantee future results.
How to Invest
There are a few different ways to invest in gold:
Gold Bullion: Imagine this as what you store in a bank vault. These are the physical gold bars and coins that need space to store. Romans used bullion bars during the 7th Century BC – just before the rise of ancient Rome. It’s a direct way to own gold, but it requires secure storage.
Gold ETFs: Exchange-traded funds are like mutual funds that trade on stock exchanges. Gold ETFs invest in gold and track its price. A ‘team’ of gold investors works together to decide the best gold stocks to get the best return on your money. They are a convenient way to invest in gold without buying and storing physical gold.
Gold Mining: Stocks: Investing in companies that mine gold can also be a way to benefit from gold’s price increases. However, these stocks can be much more unsteady and are affected by factors beyond gold prices, such as the environment and how/where the company decides to mine.
Considerations
While gold can be a good investment, it is not without risk. Gold does not pay you direct dividends or interest. Investing in gold needs patience, so it’s usually best to invest in gold as part of a broader portfolio.
Starting Early
As a high school student, you might have limited money to invest, but starting early can be beneficial. Even small investments can grow over time. If you’re interested in gold, consider starting with a small amount and learning more about the market as you go. Investing in gold can be a smart way to diversify your investments and protect your wealth—just remember to do your research.
