Gold Rush!

This text corresponds to the 'Balancing the Books' newsletter where we talk about money openly, addressing small present habits that will help strengthen our future selves financially.

We are not in late 18th century California, nor do we need to sift through river sand and gravel to acquire it. Yet, gold seekers have multiplied recently, driven by a steep price rise that neither stocks, cryptocurrencies, nor even real estate can match this year. Jokes aside, the yellow metal is the most profitable asset of 2025 with a cumulative appreciation of 53%, comfortably surpassing the $4,100 mark.

The fever shows no signs of abating amidst a wave of purchases by central banks, seeking to diversify their reserves beyond the dollar, or as a refuge against economic threats. Without making any recommendations, analysts' consensus suggests that prices may remain high due to another key factor. Take note of this concept: the 'debasement trade'. Portfolios where paper money loses purchasing power (as is happening now with the dollar's weakness) and, to compensate, investors seek assets that increase in real value, like gold or bitcoin.

Never before, since 1979, has anything like this been seen. Despite the vertigo of such a high mountain, no one wants to be left out in case of a new peak to conquer. Nor do ordinary citizens, who increasingly have this opportunity at hand, with specialised companies multiplying like mushrooms on our streets in recent years.

The formula to enter this market depends, as always, on the risk one is willing to take. Let's not forget that although gold is the ultimate safe haven asset, nothing is 100% certain in the investment world. Therefore, caution is still advised.

1. For the more experienced, futures markets might be an option, but in Spain, the so-called ETFs/ETCs, exchange-traded funds that replicate a benchmark index in real-time (in this case, gold), are more commonly used. It's important to note, however, that these products charge management fees that typically range between 0.12% and 0.7%.

2. For those who enjoy risk, including listed mining companies in a well-diversified portfolio can be an alternative. Giants like Newmont Corporation or Barrick Mining have accumulated over 120% appreciation this year. The good part? Besides this rise, those who invested in these firms also received dividends. The downside? These companies are affected not only by the evolution of gold but also by the company's management. Don't forget that these shares, when sold, must be reflected in the tax return. Losses can be offset, but if gains are made, they will be taxed at a rate between 19% and 28%, depending on the profit obtained.

3. Bullion can also be bought and sold. But beware. The price here depends not only on the quotation and weight but also on who buys or sells it. Many businesses of this type only aim to empty the family jewellery box without stretching too much. Therefore, to avoid being 'taken for a ride', one must ensure that the bullion and the company selling it are verified by the London Bullion Market Association. Only then is purity and minimum standards guaranteed. Then comes the headache of where to store it. There are entities offering safes, also for home installation. But that raises the cost of an investment that already requires a significant initial outlay with prices through the roof.

With all these pros and cons on the table, tell me, will you join the gold rush? Or will you let it pass after the juicy return already generated by the king of investment this 2025?