Why should you invest in gold?

Advantages and precautions of investing in gold

Strengths of investing in gold
- It is a safe asset (Safe Haven): when the world economy fluctuates or a crisis occurs. Gold is often an asset that investors trust and buy. Because the value tends to be stable or increase. Contrary to other risky assets Therefore, it is a good hedge against the risk of inflation.
- High liquidity Easy trading: Gold is accepted all over the world. Makes it easy to sell for cash quickly Whether holding gold bars or gold jewelry It can be easily sold at reliable gold shops.
- Helps diversify risk in the portfolio: for investors with a variety of assets Dividing money to invest in gold helps spread risk well. Because gold prices do not always move in the same direction as stocks or mutual funds. Makes the overall investment portfolio more balanced
- Easy to start, no need to use a lump sum of money: Nowadays, saving gold is convenient. Many places allow you to start with hundreds or even thousands of baht. This allows people with limited budgets to gradually accumulate gold to create wealth in the long term.

Limitations of investing in gold
- Does not create cash flow (No Cash Flow): Holding gold does not have dividends like stocks. or rent like real estate Returns will only come from capital gains when selling.
- Price fluctuations: Gold is safe in the long run. But in the short term, prices can fluctuate. There are many external factors such as the monetary policies of powerful countries. or the value of the US dollar
- There is a storage expense: if you buy gold bars and keep them yourself. You may need to rent a bank safe for security purposes. Or if it's gold jewelry There will be a premium for the craftsmanship that must be paid in addition to the price of gold.

gold investment model
- Gold bars and gold jewelry: a classic, physical method. Suitable for people who like to have assets kept with them. Gold bars have a premium value. (Production fee) cheaper than gold jewelry Therefore, it is more suitable for investing for speculation. But you must consider keeping it safe.- Saving gold: This form is becoming popular. Especially for beginners or those with a limited budget. It is the gradual purchase of accumulated gold with a small amount of money. Through the app or gold shop Makes saving gold easy and convenient. You don't have to spend a large sum of money to own gold.
- Gold Fund: suitable for those who do not want to keep their own gold. By investing through mutual funds that invest in gold. Investment units can be easily purchased through asset management companies (asset management companies) and may be eligible for tax deduction in some funds.
- Gold Futures: suitable for experienced investors who take high risks. It is a prediction of the future price of gold without having to invest the full amount. But there is high volatility. Usually invested through Forex Brokers in CFD format.

What affects the price of gold?

Factors from the global market (Global Factors)
- United States Dollar (USD): Gold prices on the world market are traded in US dollars. The value of the dollar therefore has an inverse relationship with the price of gold. That is, if the dollar strengthens The price of gold often decreases And if the dollar weakens The price of gold often rises.
- Interest rates and monetary policy: especially the policy of the US Federal Reserve (Fed), if interest rates are raised Investing in bonds or deposits will give you more attractive returns than gold, which does not pay interest. This may cause investors to sell gold and the price will decrease.
- Inflation: Gold is considered a safe haven asset that provides a good hedge against inflation. When inflation is so high that the value of cash decreases Investors often turn to buying gold to preserve their property value. As a result, the demand and price of gold will increase.
- World economic and political situation: When the world faces uncertainty such as war and international conflict. or economic crisis Investors will lose confidence in currencies and the stock market. Then turn to investing in gold This causes the price of gold to often skyrocket.

Domestic Factors- Baht (THB): for Thai investors This factor directly affects Because the price of gold bars in the country is based on the world price converted from US dollars to baht. If the baht depreciates We will need more baht to buy the same amount of gold. causing the price of gold in the country to increase
- Domestic supply and demand: Domestic demand for gold also affects the price. Especially during important festivals such as Chinese New Year, Songkran or the end of the year, gold is popularly bought as a gift or for investment. It may push the gold price up slightly.

Things you should know before investing in gold

1. Understand gold investment patterns
- Gold bars and gold jewelry: a classic, physical method. But there is a risk of storage and brokerage fees. (for gold jewelry) that must be considered
- Gold Fund: suitable for people who don't want to keep their own gold. It is an investment through a professional fund manager. Trading is as easy as stocks through the Streaming app.
- Gold Savings: involves gradually accumulating gold with a small amount of money. Starting from hundreds or thousands of baht. Suitable for beginners or those who want to save gold regularly to create long-term wealth. Nowadays, there are many reliable service providers.

2. Study the factors that affect the price of gold.
- US Dollar: The price of gold generally moves in the opposite direction to the dollar.
- Interest rates and inflation: If inflation is high Gold is often an asset that people invest in to maintain its value.
- Market demand: both from the jewelry and investment industries
- World economic and political situation: various uncertainties Often pushing investors to turn to holding gold as a safe haven asset.

3. Determine the level of risk that is acceptable.

The right way to invest in gold

1. Buy gold to keep for yourself. (gold bars/gold jewelry)
- Who is it suitable for: Long-term investors or those who wish to have tangible assets in their possession
- Advantages: It is a real tangible asset, feels stable, can be used as a gift or inheritance.- Caution: There is a risk of storage and theft. Gold jewelry has a reward value. Therefore, when selling back, the price may not be as high as gold bars.

2. Gold savings program
- Who is it suitable for: Newbies learning to invest. People who don't have a lot of budget and those who want to save money with discipline
- Advantages: Requires a small initial investment. It is a gradual investment (Dollar-Cost Averaging) which reduces the risk of price fluctuations. It is convenient and can be done online.
- Caution: You should choose a reliable service provider and read the savings conditions carefully before making a decision.

3. Invest through gold mutual funds (Gold Fund)
- Who is it suitable for: Investors who don't have time to follow the market. Those who want to diversify risk and those who want to use tax benefits (If it is an SSF/RMF fund)
- Advantages: Requires little investment. There are management experts. Convenient trading through the app of the asset management company or bank with high liquidity.
- Attention: There is a fee for managing funds. And the price may not move with the real-time gold price.

4. Invest in Gold ETFs (Exchange Traded Funds)
- Who is it suitable for: Investors who are familiar with stock trading on the stock exchange. and want flexibility in day trading
- Advantages: Very high liquidity. Trade in real time like stocks Management fees are lower than most mutual funds.
- Attention: A securities trading account must be opened. And there are price fluctuations according to market conditions during the day.

Taxes you need to know when investing in gold

1. Personal income tax

2. Value Added Tax (VAT)
- Gold bars: for retail investors gold bullion trading (96.5% purity) is exempt from Value Added Tax (VAT), allowing you to trade at full value without having to worry about this tax.
- Gold jewelry: The selling price of gold jewelry seen in storefronts includes VAT. But it will be calculated from the difference between the selling price and the buyback price. (or gratuity) is not calculated from the price of the entire amount of gold.

Summary and guidelines for beginners