For a long time, gold has always been considered a “safe haven” asset because when other investments such as stocks become volatile, panicked investors rush to buy gold and the value of gold increases.
The war between Ukraine and Russia has spooked stock markets, and gold prices have risen since mid-February, trading above USD 1,990 an ounce, passing a major psychological milestone not reached since 2011.
In times of high uncertainty, investors tend to park their cash in gold. This is because gold is considered a safe haven as well as a hedge against rising inflation. Having gold exposure can also be a way to diversify your investment portfolio and smooth out your overall returns. Please note that financial advisors generally do not recommend investing more than about 10% of your total assets in gold.
How to invest in gold
When considering investing in gold, don't limit yourself to purchasing physical gold such as bars, coins, or jewelry. There are other options for investing in gold, such as buying shares in gold mining companies or gold exchange traded funds (ETFs).
Investing in the stocks of companies that mine, refine, and trade gold is a much simpler proposition than buying physical gold. This means buying shares in gold mining companies, so you can invest using your Hisa brokerage account.
Some of the most popular stocks in this sector include:
- Newmont Corporation (NEM). Newmont, headquartered in Colorado, is the world's largest gold mining company. It operates mines not only in Africa but also in North and South America.
- Barrick Gold Co., Ltd. (GOLD). The gold mining giant is headquartered in Toronto and operates in 13 countries around the world.
- Franco-Nevada, Inc. (FNV). Franco-Nevada owns no gold mines. Instead, it buys royalty rights from other gold miners.
Note that while gold company stock prices are correlated with the gold price, they are also based on fundamentals related to each company's current profitability and expenses. Ideally, investing in individual gold companies involves risks similar to investing in other stocks.
Investing in a gold ETF does not require you to physically own the underlying assets, allowing you to indirectly benefit from the long-term stability of the yellow metal while offering greater liquidity and diversification than individual gold stocks. . There are different types of gold funds. There are also passively managed index funds that track industry trends and the price of bullion using futures and options.
This is a list of the most popular gold ETFs
| gold ETF | ticker symbol | Assets under management |
|---|---|---|
| SPDR Gold Stock | GLD | $58.1 billion |
| iShares Gold Trust | IAU | $28.9 billion |
| VanEck Vector Gold Miners ETF | GDX | $13.6 billion |
| VanEck Vector Junior Gold Miner ETF | GDXJ | $4.7 billion |
| SPDR Gold Mini Shares Trust | GLDM | $4.6 billion |
| Aberdeen Standard Physical Gold Stock ETF | SGOL | $2.6 billion |
For example, the SPDR Gold Shares ETF (GLD) holds physical gold and deposit receipts, and its price tracks the price of physical bullion. VanEck Vectors Gold Miners ETF (GDX), on the other hand, is a passively managed fund that tracks an underlying basket of stocks of gold mining and refining companies.
Aberdeen Standard Physical Gold Shares ETF (SGOL) is an exchange-traded fund designed to track the price of physical gold. The fund stores gold bars in vaults in Zurich, Switzerland, and London, England.
iShares Gold Trust IAU is an exchange-traded fund designed to track the price of physical gold. IAU, the second-largest gold ETF on the market by assets under management, stores gold bars in vaults in London and New York.
What is the minimum amount I can start investing?
The minimum amount that can be invested through His is $5 in Kenyan shillings or equivalent. To trade with His, you need to create an investor profile. Once approved, just fund your account and you're good to go. You can deposit funds into His Wallet via M-PESA or Mastercard/Visa cards.
read; How to set up your His App investor profile
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