Is Gold A Good Investment in the Philippines?

With the Russia-Ukraine war and overwhelming price hikes recently happening, it has got me thinking about what the best investments in the Philippines are during these challenging times. Investing in gold has always been on my list of investment options and so in this short but sweet article, I’ll share some bite-sized information that might be of help to you.

*Disclaimer: Please take everything I write here with a grain of salt and make sure to conduct due diligence before investing.

Is Gold A Good Investment in the Philippines?

No matter where you are in the world, chances are you’ve probably considered investing in gold. When you buy gold, you hope the price of gold will increase overtime. But let me share a little known fact – the price of gold usually moves in the opposite direction of the economic growth.

From what I know, when an economy is doing well, gold typically doesn’t do well. However, when a recession hits, gold then becomes an investor’s safe haven and so, the price of gold increases. Let’s say, during the economic crisis of 2008, the price of gold increased by 5% while stocks dropped by 37%. However, the price of gold dropped at almost 40% from 2013 to 2015, while the stock prices soared.

Is Gold A Good Investment in the Philippines?

Disadvantages of buying Gold

But one thing I have realized is that gold is hard to transfer from one place to another as you can only bring a limited amount of physical gold with you. Moreover, you also need to consider additional costs when purchasing gold. You may want to buy insurance for it and rent a safety deposit box with a bank. This means that the costs of storing gold may also reduce your potential gains.

Advantages of buying Gold

But of course, gold has its advantages too. We’ve already spoken about it as a defensive investment: you hope to never need it, but when a crisis happens, gold can help balance your investment portfolio or some of your investments that are not performing well at that time. So in my opinion, since it is a defensive investment, make sure you are aware of what percentage of your portfolio is allocated to this type of asset.

So, is gold a good investment in the Philippines? Well, the answer is that it depends on your financial goals. The bottom line is, to achieve your long-term goals and create wealth, it is essential to allocate more towards equity assets. But to reduce the volatility of a pure equity portfolio, you may want to consider investing in a negatively correlated asset (performs well when equities are down or vice versa) to equity, which in this case is gold. So, use gold as an investment portfolio diversifier. You can choose among the various gold investment options depending on your goals and time horizon.

Is Gold A Good Investment in the Philippines?