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Should I day-trade gold or invest for the long-term?



There are generally two ways you can invest in gold: Trading or Saving.

Long-term investing in Gold

Saving in gold relies more on the long-term upward trend in gold prices. As governments across the world print more and more money, and are forced to keep interest rates low, the price of gold should continue to increase over the long-term relative to fiat currency. Gold supply is increases <1% p.a. Meanwhile, 25% of all US dollars in existence were printed in 2020 alone.

Some strategies to save effectively in gold, include Dollar Cost Averaging, which involves investing the same amount of money in gold every time period. For example, you might choose to save Rp 500,000 in gold every month after you get your paycheck.  Buying the same amount of gold in each month ensures that you buy less gold when market prices are relatively high, and buy more gold when market prices are relatively low, increasing your return. More importantly, DCA builds a good habit of investing regularly, which is one of the most important factors in profiting from the market over the long-term. To automate your dollar-cost averaging, you can use Pluang’s auto-invest feature, which allows you to invest a regular amount of gold on a weekly or monthly basis.

Another way to save in gold is to use your gold investment as a diversifier for your portfolio. Since gold acts a hedge (low correlation to other asset classes), it tends to payoff when your portfolio goes down. You might decide to put, say, 20% of your portfolio in gold. During an equities bull market, you may be comfortable if your gold stays relatively flat. In return, during an equities bear market (such as the global financial crises or the Covid pandemic), your gold will appreciate. You can then sell your gold as prices increases, and buy equities when they are at their cheapest.  Moving from an asset that has recently increased in price to another asset that you expect to increase in price is called rotation

Day-Trading Gold

Trading involves carefully examining the market to predict short-term movements in the gold prices.. In order to trade gold profitably, not only do you need a strong understanding of inflation, interest rates and exchange rates, you will also need a strong understanding of technical analysis.

Whether you decide to invest for the long-term or trade shorter term price movements, Pluang’s app can give you low spreads, real-time pricing, and help you buy gold in just three taps!