Kyle Jernigan - December 11, 2021
Is Gold a Good Investment Opportunity?
As inflation continues to rise and the economy rises and falls, investors have pivoted to gold. Gold and other precious metals' rarity allow them to retain and grow their value. Gold acts as a safety net and unique investment opportunity for novice and experienced investors.
Navigating a new investment opportunity can be intimidating. That is why we are here to help. Keep reading to learn more about how and why to invest in precious metals.
Gold Has Value
The value of gold comes from history and its scarcity. Gold was one of the first metals discovered by humans and was malleable. This made it an asset to civilization, it quickly gained value as it was originally associated with deities and royalty.
Throughout history, its value has persisted due to its scarcity. Gold is abundant enough that it can be mined and purchased internationally and it is rare enough that it's able to secure its value. Gold can be measured, melted, and forged so it quickly evolved into a trading medium as it remains today.
Reverse side of a PAMP Suisse 5 gram Gold Bar in original assayer packaging. Photo Credit: Investor Crate Facility circa 2021.
Benefits of Precious Metal Investing
Adding precious metals to your investment portfolio can help you expand and diversify your investment portfolio. Here are some of the benefits of investing in gold.
Protection from Inflation
Inflation is the decrease in purchasing power of a particular currency. This is typically reflected in the increase in the cost of goods in an economic system. Metals such as gold are dollar-dominated so they can make a hedge against inflation. Banks even hold onto gold to help protect them from financial instability. Typically when the value of the dollar decreases the value of gold goes up. By stocking up on gold, banks can protect their reserves. This is a tactic you can enlist for your finances as well. The price of precious metals, such as gold performs well during times of inflation. The value of gold continues to steadily rise over time. History has proven that gold can maintain its purchasing power over long time frames.
Secure Form of Currency
Investors are always looking to weigh volatiles and stable investment opportunities. The value of national currencies ebb and flow based on the geopolitical climate of a region. Gold is the only international currency that can't be debased. Nearly every economy around the world gives it a sizable value so feeds into its security. That is why gold can retain its internationally, even during times of conflict.
Portfolio managers and financial advisors typically recommend that investors develop a wide range of stocks and investments. A diversified investment portfolio can help you reduce your risks when investing. By spreading out your investments in different markets and sectors, you can protect yourself if a certain industry tanks. Introducing precious metals like gold to your investment portfolio is a great way to cut your investment risks. The value of gold moves independently from the value of most stocks and bonds. This can help offset the typical behavior of traditional stocks.
Assorted Gold Bullion. Photo Credit: Investor Crate Fulfillment Center (EAST).
How to Invest in Gold
When you think of buying gold, your mind may go to solid gold bricks and fancy necklaces. There are a variety of ways you can purchase gold stock and assets.
If you want to pad your investment portfolio by investing in gold here are some of the most common methods of tying your investments to gold.
Gold ETFs and ETNs
Exchange-traded funds (ETFs) are convenient ways to buy physical gold shares. These shares can be bought, traded, and sold just like stocks. This form of gold acquisition converts the physical asset of gold into a paper one that can be easily managed. ETNs are exchange-traded notes that are tied to the underlying investment. They are not a direct investment in gold but are an investment in gold-related instruments.
Physical Gold Bullion
The common route of gold acquisition is gold bullion. This gold can come in the form of coins or bars. Bullion is bought in sold by the ounce.
Gold bullion and coins are recognizable and can be purchased from national dealers, local coin shops, and private parties. These items are typically sold at value with a small markup from the seller.
When you purchase physical gold assets you can either store them in a safe at home or pay to put them into storage. If you choose to purchase bullion you will need to account for the money required to store and insure your gold annually
One of the least common forms of gold bought as an investment is jewelry. Jewelry that is less than 24K is not 100% gold. For this reason, jewelry is not the best way to purchase gold as an investment. When you purchase gold jewelry, though, you can be reassured that it is durable and retains its value.
Smaller 1/10th oz Gold Coins. Photo Credit: Investor Crate Facility (WEST).
Alternatively, you can purchase mining stocks. This is not a direct investment in gold, but purchasing of shares that mine for gold. Because these stocks are still tied to the market, they remain volatile.
These stocks do have the benefit of being tied to gold, so they are not as unstable as some other sectors of industry.
Consider Gold as Your Next Investment Opportunity
Purchasing gold allows you to gain an upper hand in investments. You can help protect your assets and grow your wealth by exploring an investment opportunity in precious metals.
Connect with us to secure your shares of gold and explore other investment opportunities.