A New Approach to Safe Haven Assets: Exploring Gold Investment Methods

In times of economic uncertainty, interest in safe-haven assets is increasing. Among them, 'gold' has long been a favored safe-haven asset. Today, we delve deeper into gold investment.

What is Gold Investment?

Gold is one of the representative safe-haven assets, widely recognized as a hedge against inflation and economic uncertainty. Gold investment is one of the investment methods that utilizes this gold to pursue profits.

There are various ways to invest in gold.

• Gold Bars: This is the most traditional method. Gold bars, also known as gold bullion, are physical assets made of 99.99% pure gold. Gold bars can be purchased from banks, precious metal stores, and online exchanges.
• Investment in Gold-Related Financial Products: Representative products include gold funds and gold ETFs (Exchange Traded Funds).

These methods each have their own advantages and disadvantages, and investors must choose the appropriate method based on their goals and circumstances.Gold is a volatile assetand therefore requires thorough research and analysis before investing.

The Value of Gold as a Safe-Haven Asset

Gold has been recognized as a safe-haven asset throughout its long history. The reasons are as follows:

• Gold is a resource with limited supply:Only a certain amount is produced each year, making it difficult for supply to increase rapidly even if demand rises. This results in relatively low price volatility and maintains a stable value.
• Gold can be used as a hedge against inflation:Inflation is a phenomenon where prices continuously rise, leading to a decline in the value of currency. Conversely, gold is a physical asset that can protect against the devaluation of currency caused by inflation.
• Gold is free from political risks:Unlike currencies issued by countries or central banks, gold is independent of political influence. It tends to retain its value even during situations like wars or economic crises.
• Gold is one of the internationally recognized currencies: It is used as a means of payment in various countries around the world and plays a role in supporting the international monetary system along with the US dollar, the international reserve currency.

For these reasons, gold holds high value as a safe-haven asset. However,gold investment, like any other investment, involves riskssosufficient review and analysis are necessary before investing.

Diversifying Gold Investment Methods

Traditionally, gold can be invested in through methods such as purchasing gold bars, opening gold savings accounts, and investing in gold ETFs (Exchange Traded Funds).

Basic Market Analysis for Gold Investment

Understanding and analyzing market trends is crucial for gold investment. Below are basic market analysis methods for gold investment.

• Analysis of Gold Price Trends:Gold prices fluctuate due to various factors such as international relations, economic conditions, and inflation. By analyzing past gold price trends, you candetermine whether it is in an upward or downward trend.
• Analysis of Interest Rate and Inflation Indicators:Interest rates and inflation are closely related to gold prices. When interest rates rise, the relative value of gold falls, and when inflation rises, the value of gold rises. You shouldmonitor the interest rate policies of the US Federal Reserve (Fed) and inflation indicators.
• Analysis of International Relations and Economic Conditions:Since gold is classified as a safe-haven asset, gold prices tend to rise when international relations are unstable or economic conditions worsen. You shouldpay close attention to political issues in major countries and economic indicator announcements.
• Technical Analysis:Chart analysis can be used to identify support and resistance levels and utilize signals such as golden crosses and dead crosses to determine trading timings. Technical analysis involves a high degree of subjectivity, so it is best used as a reference.
• Listening to Expert Opinions:You can listen to the opinions of financial or investment experts to supplement or modify your investment strategy. However, expert opinions cannot be fully trusted, so it is important to establish and follow your own investment principles.

Gold Investment Methods and Brief Comparison

• Purchasing Gold Bars:When purchasing gold bars from banks or gold shops, a 10% value-added tax and a commission of about 5% are levied. When purchasing gold coins or jewelry with gold, the processing fee is added, so the commission may be around 16% to 17%.
• Gold Savings Account (Gold Banking): When using a gold savings account, a 15.4% dividend income tax is levied on capital gains, and transaction fees are incurred when buying and selling. The approximate transaction fee is 1%.
• Gold ETF / Gold Fund: When investing in gold ETFs or gold funds, a 15.4% dividend income tax is levied on capital gains, and sales commissions and management fees are incurred. These fees vary depending on the product, but are approximately 1.3%.
• KRX Gold Securities: When trading gold securities listed on the Korea Exchange, capital gains are tax-exempt. Transaction fees are approximately 0.33% and may vary depending on the brokerage firm.

The most advantageous method in terms of commissions and taxes can vary depending on individual investment goals and circumstances. For example, if you are aiming for long-term investment and prioritize tax benefits, KRX gold securities may be favorable. On the other hand, if you wish to own physical gold, you can consider purchasing gold bars, but you must factor in the value-added tax and commission.

Understanding the Advantages of Gold Investment from a Long-Term Perspective

Gold is one of the representative safe-haven assets and can also be used as a hedge against inflation. Let's examine the advantages of gold investment from a long-term perspective.

• Protection against currency devaluation: Gold is an asset that can protect against currency devaluation. When inflation occurs, the value of currency decreases, and prices rise, but gold maintains its value over time.
• Diversification effect:Gold has a low correlation with other assets such as stocks and bonds, which can enhance the diversification effect of an investment. In other words, investing in gold can increase portfolio stability.
• Trading convenience:Gold is easy to buy and sell, making it convenient to trade. It can also be invested in with small amounts, making it easily accessible to investors with limited capital.

However, because gold prices are volatile,pursuing short-term profits is risky.It is best to invest discretionary funds from a long-term perspective and diversify your investments.

So, today we have explored gold investment methods and gold price forecasts. Gold is a representative safe-haven asset that has been consistently popular, and if utilized effectively, it can potentially yield significant returns.