Last Updated on February 11, 2021 by Ope Quadri
In this post, I’ll share with you the best ways to invest and seven great benefits of gold investment in Nigeria, how to trade in gold safely.
The global financial crisis of over a decade ago (2007) had a drastic impact on the lives of a lot of people that many may never forget.
Especially the extended stock market meltdown that happened immediately. Investors lost substantial amounts of money that a lot decided never to invest in stocks again.
Recent happenings recorded in the global market are creating the fear that there might be a repeat of the same economic crisis and people have started looking out for a more secured and stable, crisis-proof investment opportunities.
The type of asset that comes with this kind of protection is Gold.
Though a lot of people are of contrary opinion that growth increases as a result of flexible monetary policies, a growing volume of international trade, and escalating consumer demand.
Nevertheless, a critical research on this issue will bring delicate uncertainties to light.
The increasing global debts and a disorder in trading patterns are beginning to emerge as the big economies of the world chase after protective policies.
Let us consider some developments that some people think have the capacity to disrupt the world economic order.
Increase in National Debt
If you are well-informed on the latest developments in the global economy, you would have come across the report that US public debt is on a radical increase.
At about US$21 trillion and still rising, US public debt is beyond her entire economy!
This, however, has caused great anxiety among analysts because the rising debt of this staggering proportion is capable of triggering off an economic crisis that may lead to erosion of the value of financial assets.
You may wonder why the world should be worried about the US debts. Why shouldn’t it? Was the fall of the US mortgage sector not the reason for the 2007 global economic-financial mayhem?
Trade Wars and Protectionism
Another worrying development that is undoubtedly affecting investment choices is the trade wars between the China and the United States.
This issue has begun affecting the stock market with the Dow Jones falling on the back of developing issues and it is terrifying that this could get worse.
The outcome could be increased inflation as well as a major economic downturn, which would surely impact people across all economic levels.
Conflict of interest amongst world superpowers, particularly Russia and the United States in the Middle East endless issues, is another remarkable development that is capable of causing a major universal economic disaster which could have an adverse effect on investment and businesses.
For these reasons, it is wise investment advice that you make moves to diversify your portfolio to comprise assets class which is verified to be safe during economic chaos.
Gold has unfailingly proved to resist economic woes; thus over time, it has been used by banks and investment firms to stock up value and preserve wealth. Now with this knowledge, people now prefer Gold as a major component in their financial planning program.
If you are a beginner or have no knowledge about Gold, here are the important things to know about gold investment in Nigeria
Value you get from investing in gold in Nigeria
- Used in making jewelry
- It doesn’t move in outright value
- It appreciates in value
- Byproducts in nature
- It conserves wealth
- You make money when there is an increase in price
- Dividends is available when you invest in gold mining firms
- Value of gold increases during economic challenges
Used in making jewelries
Gold is a precious stone that is flexible and is used for making jewelry and ornaments in addition to applications in industry and medicine. It has been a treasured stone for over 5,000 years and was at one time used as a medium of exchange across cultures.
It doesn’t move in outright value
Gold does not move in outright value. That is, a 24-carat gold bought today and stored up in a vault or in a safe deposit with the bank, for a countless number of years later, it still remains a 24-carat gold. The desirability is in its inherent value which appreciates with time.
You make money when there is an increase in price
Investment in Gold does not yield interest like is expected when you invest in fixed income assets like treasury bills, bonds, and other money market instruments. You mostly make money when there is an increase in price if you keep physical gold or gold items over a time period.
Dividends are available when you invest gold mining firms
If you do not invest in the shares of gold mining companies, then you will not get dividends from investment in gold the way you would receive if you invested in ordinary shares of quoted companies.
Value of gold increases during economic challenges
The value of gold increases during periods of insecurity and economic downturn. The is because during this period of uncertainty, people have a tendency to move out their investment in paper asset and search for a safer physical asset that preserves capital.
It appreciates in value
Gold usually appreciates in value but the appreciation may not always be astronomical. In fact, there have been times when gold experienced a loss in value.
Studies have also revealed some periods when stocks beat Gold in terms of yields.
Byproducts in nature
Financial instruments with gold as their basic asset are byproducts in nature and as such are a very unstable and dicey investment like other derivative products.
Investing in physical gold will entail that you make preparation for its storage and safety.
For this cause, you need to be exceptionally careful in handling your dealings so that you do not entice unsolicited guests into your store house.
There used to be a time when countries backed their currencies by gold. It is not done any more, still gold remains important in the global economy.
It conserves wealth
It has been discovered to be an instrument that conserves wealth, hedges against inflation, resists challenging economic cycle and most especially provides profitable investment diversification opportunities.
Benefits of investing in gold in Nigeria
- Investment security
- Its tangibility
- It is inflation-proof
- You can invest with privacy
- Gold is risk-free
- Good retirement plan
Some of the reasons you might want to delve into gold investment in Nigeria include the following:
Gold is physical. You can hold it in your hand and know it is real. Other type of financial assets are mere numbers available on the stock market which are capable of rising or falling.
It cannot be emphasized enough that gold is well-recognized as a safe investment, especially in troubled financial times.
It isn’t really affected the way fiscal assets are affected by the economic cycles due to the fact it does not rely on the stability of the financial or economic system.
Good retirement plan:
Gold is just one out of many of the very best financial investments you could use to prepare for your retirement.
As you get older, you wish to choose much stable investments so you don’t lose all your money in a financial crisis.
Unlike every other investment, gold doesn’t lose its value. As a matter of fact, when there’s economic instability, the value of gold increases.
Gold serves as a good means of diversifying your investment portfolio and hedge against the hazard of diminution in the value of your portfolio.
It does not matter whether you presently invest in stocks or other types of asset; it is always advisable to add some gold in your portfolio.
Gold is risk-free:
Except for treasury bills and sovereign bonds that are supported by the full trust of the government, gold is the only asset class that is risk-free.
People who are preparing for a comfortable life after retirement crave for a dependable portfolio. They want to avoid the likely hassles when the economic situation suffers a decline.
Gold meets these conditions. It is risk-free and also does not change extensively.
It is inflation proof:
Investment in gold bars (tangible gold) is typically not affected by inflation for the reason that it increases in value most of the time more than it can be affected by a price drop and its price gains is always beyond inflation levels, giving its holder positive real returns every time.
Even when currencies are devalued, gold will maintain its value in worst case scenario if not rise in value.
You can invest with privacy:
Buying gold bars is just like buying other commodities. You simply identify a credible buyer and make your purchases.
You have no obligation reporting your purchases to any central authority or regulator unlike stocks and other financial instruments.
Over the years, increased wealth of emerging market economies boosted demand for gold. In most of the of these countries, gold is intertwined into the culture. India is one of the largest gold-consuming nations in the world.
How to invest in gold in Nigeria
You make money by either trading in physical gold, investing instrument having gold as underlying instruments, renting out gold jewelries for occasions or by doing all three.
How to trade in Gold in Nigeria
You can actually make money buying and selling physical gold. Physical gold comes in different types and you have to decide on the type you want to trade on.
The numerous forms of gold takes include Bars, Bullion, Coins, and different kinds of pieces of jewellery. Prices of gold are centred on its weight and they come in diverse karat up to 24.
To buy and sell gold and gold-related products, you need to have a weighing scale, a store for your gold, a plan to ensure security and a thorough knowledge of recognizing and discerning real from fake gold.
If you deal in physical gold, there are some trusted gold merchants in the United States which would pay you good money base on the quality (karate) of your gold.
In fact, some of the Bureau De Change dealers you find around also deal in gold buying and sales in Nigeria.
Where to Purchase Gold In Nigeria
Gold is mostly sold in Zamfara, Kano, Lagos, Abuja, Osun. Gold is mostly sold in the black market in Nigeria, that’s why the government is putting in place measures to regulate its sales. Be mindful where you purchase your gold from.
A recommended place to begin trading gold could be Sell Gold Nigeria, an online dealer for fairly used gold commodities.
In order to keep yourself well-informed on current gold prices, you should visit gold price ticker, an online platform where current global gold prices can be gotten even in Naira. More so, to trade in gold commodities, you can begin with what you have at the moment.
As at the time of writing this, a 10 karat 1 gm gold bar worth about N6,000. With as little investment as N200,000 to N500,000, you can start your gold trading business and be sure to make as much as a 100 per cent return in a short while.
How to Invest in Gold
If you don’t have the time to search for physical gold and gold commodities, you can as well choose to invest in financial instrument having gold as its primary assets and still earn money.
Some of these instruments comprise: mutual funds, ordinary shares in companies whose main business is gold mining or gold trading, ETFs and gold futures.
Presently, these instruments are inadequate in the Nigerian market but there is gold ETF that is being transacted on the floors of the Nigerian Stock Exchange. This is the New Gold ETF.
Contact your stockbroker for help if you wish to invest in gold ETF or shares of companies in the business of gold mining, processing and trading,
Above all, investment in gold is a good business, you must make sure you buy from a trusted seller and sell to trusted buyers and vice versa.