As we approach the end of the year, it’s clear that global markets are still mired in a state of uncertainty as a result of the pandemic. In the U.S., for instance, we’ve seen a fairly strong recovery in terms of pure stock market trends and numbers — but our report on ‘Disappointing U.S. Job Growth in September’ pointed to some concerns below the surface that are keeping people uncertain about the state of the American economy. In the UK, not dissimilarly, the stock exchange has rebounded at least to some extent — but there are serious warning signs, such as the slowing consumer spending discussed by Yahoo! Finance recently.

In these cases and some others like them around the world, the bigger story is the same: Markets look relatively strong or encouraging on the surface, but major economic indicators are leading some to forecast new market crashes or instability.

With so much uncertainty in major financial markets around the world though, one — somewhat unsurprisingly — has stood out as a beacon of stability and prosperity. The gold market, as it has done during past recessions and crises, has been thriving amidst the pandemic, and continues to trade near an all-time high in value as we near the end of 2020. This has understandably led many people to consider gold investment for the first time, which brings us to our central questions: Should you buy in? And if so, how should you go about entering a market you may not be familiar with?

Understanding the Market

At this moment, late in 2020, it’s easy enough to look at gold and understand the market as one that moves inversely to major stock exchanges during times of hardship. This isn’t entirely inaccurate, but it’s also far from being a complete assessment. So, as you determine whether or not to buy into gold, take some time to study the market and gain a more thorough understanding of it. What makes gold thrive in normal times? What key indicators do you need to keep an eye on? Why is gold thriving while so many other markets are showing troublesome signs? These are questions to ask and answer before you make a trading decision with your own money.

Practice

Not all that long ago, there weren’t many convenient ways to practice trading in any given market. Now, however, there are online and mobile tools that allow you to do just that with ease, which presents a terrific option for those entering new markets. The MetaTrader 4 trading platform on FXCM shows that some of the tools available now facilitate “free practice accounts” in various spaces — including forex, cryptocurrency, and gold. This means that if you’re uncertain about trading in the gold market because you’re unfamiliar with it, you have the option to train yourself in a fake (but wholly realistic) market.

Interpreting Present Trends

Interpreting present trends in gold is part of gaining a better general understanding of the market, as discussed above. But it also means digging into why specifically gold has thrived in 2020. The simple answer is that gold has a history of acting as a safe haven and maintaining stability in times of crisis. This in turn leads more investors to store their money in gold when times are tough, which only furthers the sense of stability, and so on. However, Washington Post’s analysis of gold’s performance points to a few additional factors as well — such as positive media coverage, a weekend U.S. dollar, and low yields. Developing a more comprehensive understanding of why exactly gold looks so appealing right now should ultimately help to inform your decision regarding your own investment.

Predicting Future Movement

This point may go without saying. But once you’ve developed better understanding of gold, and perhaps tried some practice trading on your own, it’s up to you to predict future movement as best you can. This is the goal for any investment, but it’s particularly important to keep in mind when you’re considering buying into a soaring market. You want to be sure that if you do invest, you’re doing so for the future, and not the recent past.

There’s no doubting the intrigue in the gold market right now, particularly compared to so many other options. But taking some time to go through these points and develop your own assessments is still a good idea before you decide to buy in yourself.