Should Africans Start Buying Gold?


Gold has been a great blessing for Africa in the last decade. The recent ‘gold rush’, spurred from the rally in the gold price from below $700 per ounce to an all time high of over $1,900 per ounce, has had a very positive socio-economic impact on Africa’s ‘gold nations’. South Africa, Ghana, Tanzania and Sudan are amongst the top 20 biggest gold producers in the world. These countries’ economies have benefitted greatly from mining and exporting the precious metal over the last decade. However, it is not only the South Africans, Ghanaians, Tanzanians and Sudanese who can benefit from gold. Every middle class African now has the opportunity to benefit from an increase in the value of gold. They can do so by purchasing gold as a financial investment.

Gold Price Movements

Since gold’s all time high value of $1,917.90 per ounce in August 2011, the price has come off quite substantially, together with almost all commodities, due to the fear of an economic slow down in China. Gold’s five-year low was at $1,072.30 per ounce in July 2015. However, the price has since stabilized and has been on an upward trend. Currently, gold is trading at around $1,265 per ounce and has seen an almost 20% rally since the start of the year. Many experts believe that there is still a lot more upside for gold in 2016, as gold is often considered to be a ‘safe haven’ asset in times of financial and economic uncertainty. With economic growth sluggish across the globe and a weak start to the year for stocks, gold has become an increasingly popular investment in 2016.

How To Invest In Gold

Gold used to be something that only the very rich could afford, but now there are several ways in which Africans can invest in gold. You could purchase physical gold in the form of coins or bullions, invest in gold funds or buy physical gold ETCs.

Physical Gold

You can quickly buy gold online in the form of gold bullions or coins. This way you can invest in hard assets, which you can see and touch. Many investors like the allure of being able to physically hold their gold in their hands. However, this comes with the added cost of having to store it in a secure place, such as a safe or a safety deposit box with your bank.

Gold Funds

Another option would be to invest in gold funds. Gold funds are investment funds that collate money from investors to purchase physical gold and stocks of corporations that are involved in the exploration, mining, processing or distributing in gold. Gold funds let you gain diversified exposure to gold as an asset class, as you are not purely investing in physical gold.

Gold ETCs

If you would like to invest solely in gold, and benefit from the increase in gold price, then another option would be to purchase a physical gold ETC (exchange-traded commodity). ETCs work in the same way as ETFs (exchange-traded funds). They can be bought and sold on the stock exchange and mirror an underlying asset, which in the case of a gold ETC will be the price of gold. The main benefit of holding a physical gold ETC is that you can easily sell it again on the exchange and you don’t have to store any gold, as you do with purchasing gold bullions or coins.

With a market sentiment set for a continued rally in gold and easier-than-ever access to gold investing, it might just be the right time for Africans to invest in this precious metal and have a golden financial future.


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