The phrase ‘once in a lifetime’ tends to be bandied around like confetti when it comes to talking about investments. If you’re talking about investing in gold, though, it’s a description that I feel is fully deserved. But is putting your money in this particular commodity a better idea than buying UK shares?
First let’s look at gold’s appeal right now. This week it’s rocketed to levels that no-one has ever seen in their lifetime before. Having banged through the previous 2011 high around $1,920 per ounce to a top of $1,975 on Monday it has fallen back modestly as investors have booked profits.
A charge through $2,000 per ounce is an inevitability, though, and one that I expect to happen sooner rather than later, too. I think that getting exposure to gold is a brilliant way to try to make a million, then. And investors can do this by buying into some choice UK shares.
Investment demand has rocketed!
Gold prices have been on an upwards slant for more than a year now as fears over the global economy have accelerated. But gains up until the beginning of 2020 were modest compared to the ripping advances following the Covid-19 outbreak. Bullion was trading much cheaper at around $1,515 per ounce on 1 January.
Recent data from Refinitiv illustrates how strong flight-to-safety investment demand for gold has been. According to the latest edition of its much-respected GFMS Gold Survey, total bullion holdings in gold-backed exchange-traded funds (or ETFs) clocked in at 436 tonnes in Q2 2020. This was up a whopping 361% from the same 2019 quarter.
Refinitiv believes that gold hasn’t shot its bolt yet, either. According to Cameron Alexander, director of precious metals research at the organisation:
“… the overall macroeconomic backdrop remains very supportive for gold. We believe that gold will continue its uptrend, driven by growing concerns over the global economic recession, fears of a second wave of COVID-19, heightened geopolitical tensions, historically low and negative interest rates as well as rising inflationary expectation amidst unprecedented levels of stimulus measures launched by central banks around the globe.”
Great gold stocks
Conditions couldn’t be more perfect for gold or gold investors, then. This is why I believe that the metal offers a once-in-a-lifetime buying opportunity right now.
And this is where buying UK shares comes into the equation. Now you can buy into one of those ETFs. You can buy bars and coins of the yellow metal as well. Doing this will let you ride the growing gold price and make big returns during this potentially-turbulent decade.
But this is not the most efficient way to use your cash. Instead I think you should buy UK shares like Centamin, Polymetal International, or Highland Gold Mining. These gold stocks allow you to piggyback a rising metal price while earning a handsome dividend. These particular gold shares offer forward yields of between 4.5% and 5%.
Buying gold stocks is a brilliant tactic for share investors. It’s one of the hottest games in town in my opinion, though it’s not the only way that UK shares can help you make a million following the stock market crash.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.