Gold Prices Soaring, Is It Still a Good Time to Buy?

An analysis suggests that while gold prices have surged in the past month, which may lead to short-term price pressure, there are still many reasons to buy gold. Park Hyun-ji, an expert, explained, "First, gold has surged in the past month. So, while the short-term price surge might be a burden, there are still many reasons to buy gold."

Central banks continue to purchase gold steadily, and individual investors' demand for gold is also increasing. Furthermore, it is projected that gold prices are highly likely to rise even further as inflation stabilizes and interest rates are frozen or cut.

For gold investment, an ETF strategy combining physical gold and mining company ETFs was proposed. Park Hyun-ji, an expert, recommended, "For the core, hold a large proportion of physical gold; and for those who want to obtain short-term capital gains, add a portion of gold mining company ETFs, which have a leverage characteristic, to capture both gold price movements by holding them separately."

The approach involves holding a large proportion of physical gold ETFs like GLD or IAU as core assets, and if aiming for short-term capital gains, adding a portion of gold mining company ETFs like GDX to achieve leverage.

It was emphasized that for long-term gold investment, costs, particularly management fees, must be considered. Park Hyun-ji, an expert, stated, "From the perspective of an individual investor, what is important for long-term gold investment? And when investing a large amount in a basket, what is important is cost."

Institutional investors primarily prefer large physical gold ETFs like GLD, but small investors can use mini-version ETFs like QQQM to increase cost efficiency. Domestically listed gold ETFs offer good accessibility and the advantage of investing through pension accounts.

When investing in gold, whether to trade in dollars or Korean won may depend on the investment period and purpose. Park Hyun-ji, an expert, commented, "The difference, I think, is simply whether you trade in dollars or Korean won, and to what extent and for how long you plan to hold it."

Investors who intend to hold gold for the long term tend to prefer currency-exposed (dollar) products. This is to directly reflect changes in gold's value as a dollar asset.

Conversely, if the purpose is to invest small amounts or diversify through a pension account, accessing domestically listed gold ETFs may be advantageous. Domestic ETFs can be conveniently traded in Korean won, and pension account tax benefits can be utilized.

However, it was added that attention is required for gold futures ETFs as rollover costs may occur.