Recently I decided I should be investing in gold. After careful research on the subject, I placed my first order of physical gold. Today that order arrived so I decided to explain, why invest in gold now and how I did it?
During times of economic turmoil, smart investors try to limit their losses by shifting funds to stable investments. Gold traditionally offers the most stability, giving you a way to preserve your wealth and weather almost any financial storm.
If you want to protect your retirement or savings plans, here is what you should know about investing in gold.
How Can Investing In Gold Help Protect Your Wealth?
Gold offers protection against stock market crashes, inflation, deflation, and other short-term financial setbacks. The price of gold is often much less volatile compared to other commodities due to the vast quantity of gold that remains in circulation.
Experts estimate that over 19,000 tons of gold have been mined throughout the history of the world. An additional 2,500 tons of gold is mined each year. About 20% of the gold mined is used for physical gold investments, including gold bars, coins, and exchange-traded gold funds.
The quantity of gold saved by investors and central banks around the world helps keep the price relatively stable compared to paper currencies, stocks, and other investment vehicles.
The price can be influenced by various macroeconomic factors, such as the price of oil and currency exchange rates. However, gold is a global commodity and not a fiat currency. It is affected less by issues in individual regions or countries. In fact, the price of gold is often used as a benchmark for the exchange of currencies.
During economic uncertainty, even traditionally stable treasuries and securities that are backed by the U.S. government become risky. Investors use gold to hedge their losses. As more money flows into gold and other precious metals, the price of gold becomes more stable and may even offer a moderate return.
Why Choose Physical Gold Over ETFs?
You can invest in precious metal by purchasing physical gold or through investment products, such as exchange-traded funds (ETFs). Buying physical gold provides several key advantages compared to ETFs, further limiting the risk of the investment.
When you buy an ETF, you do not physically own the gold. You cannot take ownership of it and trade it outside of the stock market, which creates counterparty risk.
The ETFs are relying on financial institutions to meet their obligations. If the economy collapses, banks may not be able to deliver. You do not need to worry about counterparty risk when you purchase physical gold.
Physical gold is yours to hold on to. You can store it, trade it, or choose to sell it at a local dealer at the current spot price for quick cash.
Physical Gold Comes In Bars And Coins
Before shopping around for physical gold, you need to choose between gold bullion and gold coins. Gold bullion is the name for gold bars that are created by pouring molten gold into bar-shaped molds. Large gold bars, such as the standard gold bars held by central banks, are typically called gold ingots.
A standard gold bar is the 400-troy-ounce gold bar, which weighs 12.4 kilograms. The bars typically traded by investors are the 100-troy-ounce bars and the kilobars (32.15 troy ounces).
Each bar contains specific branding to reduce the risk of counterfeiting. Depending on the gold producer and dealer, the bar may contain serial numbers and come with a certificate of authenticity and special packaging.
Gold coins are minted, which allows gold producers to add detailed reliefs and features to the coin. This makes the coin easier to identify and more difficult to counterfeit. They are also much smaller compared to gold bars.
The size of gold coins varies from 0.1 to 2 troy ounces. The most commonly traded size is one troy ounce. The smaller size makes coins easier to trade and more accessible for the average investor.
Gold coins minted by central banks are also backed at their face value. For example, the Canadian Gold Maple Leaf is legal tender with a face value of CAD 50.
Gold Coins Versus Gold Bullion Bars – Which Is The Best Gold Investment?
Gold coins are easily recognizable, hard to fake, and sell at higher premiums compared to gold bars. This makes them highly liquid and the smart choice for the average investor. However, if you plan on investing a large sum of money in gold, buying bullion bars may make more sense.
Gold bullion bars typically come with lower premiums, which means you spend less per transaction and bar compared to buying an equivalent amount of gold coins.
How To Buy Physical Gold To Protect Your Wealth
After choosing between gold bullion and coins, the next step is purchasing the gold from a dealer. You can buy gold from online dealers or local physical dealers.
Local dealers that operate brick-and-mortar storefronts offer a couple of benefits. Buying locally allows you to physically inspect the coin or bar before buying it.
As their reputation depends on the authenticity of their products, local dealers are also highly trusted. However, they have more overhead costs compared to online dealers. This results in higher prices and fees when buying locally.
If you want to avoid paying too high of a premium for your gold, consider using one of the following reputable online gold dealers.
JM Bullion is a Dallas-based online retailer of precious metals, including gold bars and coins. You can shop for American Gold Eagle Coins and other popular gold coins from major mints. The online store also offers gold bars in a variety of sizes, including gram-kilo bars and one-ounce bars.
Every product is carefully inspected to ensure its authenticity, providing peace of mind in your investment. You also get free shipping on large orders and competitive premiums.
BGASC.com is another U.S.-based online gold dealer with reasonable premiums and excellent customer service. This is the dealer I chose for my first order.
You can shop for all types of gold, silver, platinum, and copper coins and bars. The website accepts all major payment methods through its secure payment gateway, including PayPal and bank transfers.
Along with precious metal products, BGASC.com has a wide range of complementary products. You can buy coin capsules, holders, tubes, bags, storage boxes, and other supplies for protecting your physical investment.
SD Bullion is a subsidiary of SilverDoctors.com, which was founded in 2011. The company is currently one of the fastest-growing precious metal dealers in the United States and maintains an A+ rating from the Better Business Bureau (BBB).
The online store is easy to browse and the prices are frequently updated based on the current value of gold or silver. You can ensure that you get a fair price for any precious metal product purchased from SD Bullion.
Investing in gold remains one of the safest ways to protect your wealth. While a diversified stock portfolio can bring considerable gains, the stock market can also be extremely volatile.
During a global recession, major investors start moving more of their funds to gold and other precious metals. This shift increases the volatility of the stock market while stabilizing or moderately increasing the value of gold.
If you want to shield your wealth from economic uncertainty, gold may be the smart choice. Remember to only buy gold from a reputable dealer, such as one of the online dealers discussed.
Keep in mind that every investment comes with a certain level of risk. However, investing in gold could provide a way to ride out an economic collapse without losing your savings.