Investing in gold without having the physical asset is possible, simple and can even be done in pesos. The precious metal is considered a shelter assetand there are many stock market operators who they recommend having a portion, at least, of the portfolio in instruments that follow their price.
Although gold ended the week with losses, in early May it shot up to $2,072.19 per ounce, just a few cents off its all-time high of $2,072.49.
About, Ignacio Sniechawsi, IEB’s Head of Research opined: “Gold is historically considered a haven of value in times of uncertainty: wars, market volatility and periods of high inflation. Gold, although it is a precious metal that Generally speaking, it has never lost value. It also suffers variations in its price as a result of the global macroeconomic situation. It has the advantage of having a constant and growing demand and a supply that is limited (it is not a renewable resource)”.
Thus, its price has a high correlation with the inflation registered in developed countries, the interest rate and even the strength or weakness of the dollar.
Why invest in gold?
For Sniechawsi it is a good strategy to have a percentage of our portfolio in gold. “Gold is highly defensive, it protects our portfolio against potential turbulence. It is precisely at times when finding assets with positive returns is difficult when we notice that the benefit of having gold in our portfolio shines“, he expressed.
For his part, Diego Martínez Burzaco, Head of Research and Strategy at Inviu, said in a dialogue with this medium that one should think of it as insurance for the portfolio. “Generally, positions are taken that are not greater than 10% of the portfolio, in a global portfolio. And it is insurance precisely against unexpected events, deep recessions, or against a process in which fiat currencies fall,” he clarified.
cedears
The Cedears are mirror shares of companies that are listed abroad but that can be purchased on the local stock market, in pesos, and that are tied to the price of the dollar Cash with liquidationTherefore, these assets in recent years have increased the percentage of local investors.
One of the options is to invest in the mining Barrick Gold (GOLD) since it is a Cedear with a large volume and in this way it is positioned in papers of the largest mining company in the world. But there are also other options like Yamana Gold (AUY), Harmony Gold (HMY) and Novagold (NG).
Although they do not directly follow the price of gold, its price is correlated, and they also provide a hedge against a possible devaluation in Argentina.
“This mechanism has its advantages and disadvantages: the disadvantage is that we are not investing directly in the metal, but in shares of a mining company that produces said metal. This leads us to depend on the quality of the company’s management, its financial situation, its production costs, etc. The advantage is that in addition to having a certain correlation with the price of gold, they are companies that normally distribute attractive dividends and have great liquidity,” Sniechowski said.
cryptocurrencies
There is a stablecoin called Pax Gold (PAXG) that during May became one of the top five best performing cryptocurrencies at the beginning of the month.
Pax Gold is a token that was created to represent the price of one ounce (31 grams) of a gold bar. Is a stablecoin that is pegged to the price of gold and fluctuates based on gold price fluctuations.
That a token is backed means that, for each token issued, there is an equivalent asset that guarantees the liquidity of that token. In the case of PAXG, this means that for each token issued there is a physical reserve of this asset that is deposited in a bank.
PAXG had its maximum price that almost three years ago. It was precisely when in August 2020 gold reached $2,058, a price very close to the current one. The difference may be due to the fact that although stablecoins follow the price of the underlying asset, they can have slight variations.
Other options
Diego Martinez Burzaco He also explained that there is the possibility of operating through ETFs. “There is one that brings together larger mining companies, the GDX (VanEck Gold Miners), and there is also the GDXJ (VanEck Junior Gold Miners) that brings together the smallest mining companies; the J stands for Junior. A more traditional way to play and with less volatility is through the GLD ETFs that replicates physical gold. These options are not available in the local market, but in the international one”said the expert.
There is also the alternative of investing in physical gold. According to Sniechawsi it is quite accessible in our country, there are options to buy bullion of different weights and coins.
Another option are the ETCs, which are certificates from companies that have gold in safekeeping and issue said certificates against that gold. “Here the advantage we have is that we should not worry about its storage, its security, but the risk is that we must know and monitor who is the issuer of the ETCs and what degree of credibility, transparency and trajectory it has in the market. It also has the advantage that it is easier to achieve liquidity since you only need to sell said ETC”, Sniechowski closed.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
