Why Buy Gold 11 Reasons To Invest In Physical Gold Bullion
Jeff Clark, Senior Precious Metals Analyst, GoldSilver
Is gold a good investment? Why should you own it?
Its natural and even prudent for an investor to wonder if a particular asset is a good investment or not. Thats especially true for gold, since its an inert metal and doesnt earn any interest.
But the reasons for owning physical gold go beyond the possibility of its price rising. Gold bullion offers distinct advantages that simply cant be found in almost any other investment. These advantages give you power as an investor. And yes, one of these reasons is because the price is poised to rise significantly .
Lets first dispel with a common misconception about gold: it doesnt pay interest or dividends so is not a good investment. But gold isnt supposed to do that, and thats a GOOD thing
Owning gold means you dont have to worry about earnings reports, changes in dividend and interest payments, or unhappy shareholders. Its one of few assets where those factors are not present, freeing it up to do what it has done for thousands of years: store value for you.
An ounce of gold can buy a nice suit todayjust like it could hundreds of years ago, and even thousands of years ago . There are times when it will buy or less, but it has always come back to this equilibrium. This track record is unmatched by any other investment.
Here the top 11 reasons why every investor should buy some gold bullion, with emphasis on investment implications
Gold Mutual Funds And Etfs
Rather than investing in a single company tied to gold, you invest in a basket of gold-related securities through gold mutual funds or ETFs. Gold funds may track the price of gold, include the stocks of multiple gold mines and refineries or provide exposure to gold futures and options.
Top gold mutual funds and ETFs include:
- iShares Gold Trust
- Invesco DB Gold Fund
- Franklin Gold and Precious Metals Fund
The Best Strategy For Gold Investors
Marcus Reeves is a writer, publisher, and journalist whose business and pop culture writings have appeared in several prominent publications, including The New York Times, The Washington Post, Rolling Stone, and the San Francisco Chronicle. He is an adjunct instructor of writing at New York University.
The pursuit of gold has led to murder and mayhem, wars, and an unrelenting fascination for much of history. Gold is so important that it has become synonymous with the word “wealth.” But having gold nuggets, coins, or futures contracts does not mean your portfolio value is rising, or that it’s safe. Let’s explore gold futures, as well as usage in an investment portfolio.
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Can We Ever Be Entirely Certain About Fakes And Forgeries
No, not even good delivery bullion is 100% certain not to have been tampered with.
However:-
Most of us are forced to rely on the last expert to handle our gold. When we sell sometimes decades after we bought we are presented with a difficult dilemma when the dealer goes into a back room to test our gold for authenticity.
Suppose they return saying its a fake. What then?
The Benefits Of Buying Digital Precious Metals
- For a cost effective option, our DigiGold service allows you to purchase physical gold, silver or platinum based on monetary value instead of weight.
- Straightforward and transparent pricing.
- You can invest in precious metals from as little as £25, as you are buying a percentage of a bullion bar.
- DigiGold comes in the form of large bars, without the need to cut or shape them into smaller quantities, so there are economies of scale that are passed on to you. The prices are worked out to the nearest 0.001oz, so youll know youre getting the latest rates when you buy or sell your bullion.
- You own your DigiGold and have full legal title over it, so theres no third-party risk involved.
- The Royal Mint is custodian of the bullion and it is automatically stored in The Vault. Its reconciled and accounted for daily, and is guarded by trained security staff 24 hours a day.
- Our digital gold is VAT-free for non-VAT registered individuals.
- It makes buying and selling bullion effortless – just open an account, transfer in funds and you can use your balance to buy DigiGold in whatever quantity you choose 24 hours a day, 7 days a week, 365 days a year.
- The Royal Mint offers a guaranteed buy back option through DigiGold, so you also dont have the risks associated with storage, as you could with physical coin and bar purchases.
- You can take physical ownership of your precious metals at any time.
- To find out more information on our DigiGold service, .
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Pick The Best Gold Bar Size For You
Tip: Buy one-ounce gold bars to meet future needs as they come up. If you have a high net worth, buy both small and large bars.
One of the first decisions youll have to make when buying gold bars is what size to purchase. Gold bars come in different sizes and weights. Theyre as small as one gram , and as big as 400 ounces. Its these larger sizes that central banks, exchanges, and ETFs buy. Generally speaking, the bigger the bar, the smaller the premium. Thats because its less costly to produce a kilo gold bar than a one-ounce gold bar. But that doesnt mean you should buy the heaviest bar you can afford. Just the opposite, in fact
- Big bars do not offer the divisibility smaller ones do. When you sell a big bar, you are liquidating a sizable investment. Its more practical to sell multiple smaller bars to exchange the exact amount of gold for the exact amount of currency you need.
- Fewer potential buyers. Not many investors can afford to buy, say, a 100-ounce bar. If you have smaller sized bars, you have a greater pool of customers.
- Lower counterfeiting risk. Counterfeiters prefer big bars, because theyre worth a lot more.
- Avoids the need for an assay. The bigger the bar, the more likely it will require an assay to be sold. An assay adds an extra expense, is inconvenient, and will delay your payout.
On the other hand, premiums on smaller gold bars are higher, but they are still more affordable. And owning a little gold is better than not owning gold at all.
Guarantee: Gold Bars Or Gold Coins
Both private gold mints and government gold mints guarantee the several gold bars and gold coins they strike and issue.
The question a concerned gold bullion buyer might ask themselves perhaps is who enforces this guarantee and which entity has a longer potential to last.
For example, the US Mint has the US Secret Service helping to ensure that all US Mint gold coins issued never get counterfeited successfully.
The Royal Canadian Mint has the Royal Canadian Mounted Police ensuring its gold coins, and gold bars also never get counterfeited successfully.
Private gold mints have been faster to respond to fake Chinese gold bars by adding cutting edge technological applications to many of their products, like Sunshine Mintingâs MintMark SI technology.
The penalties for counterfeiting government legal tender gold coins, for example, are punitive Federally as well as counterfeiting private mint gold bars.
In terms of overall guarantee between gold coins vs. gold bars, the entities with the longer track records and monopoly on violence win this debate government mints have the edge.
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How Much Gold Is There
Gold is actually quite plentiful in nature but is difficult to extract. For example, seawater contains gold — but in such small quantities it would cost more to extract than the gold would be worth. So there is a big difference between the availability of gold and how much gold there is in the world. The World Gold Council estimates that there are about 190,000 metric tons of gold above ground being used today and roughly 54,000 metric tons of gold that can be economically extracted from the Earth using current technology. Advances in extraction methods or materially higher gold prices could shift that number. Gold has been discovered near undersea thermal vents in quantities that suggest it might be worth extracting if prices rose high enough.
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. Weve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our investing reporters and editors focus on the points consumers care about most how to get started, the best brokers, types of investment accounts, how to choose investments and more so you can feel confident when investing your money.
Investing disclosure:
The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal.
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Investing In Gold Coins
There are all sorts of gold coins from the Chinese Panda to the American Eagle. Some coins are more expensive than others because they are rare, beautiful or antiques these are known as numismatic coins, and they have value as collectibles over and above their value as gold coins.
But if you are simply looking to track the gold price, then ignore these numismatic coins and focus on those that offer the cheapest premium’ over the spot price .
First produced in 1967, the one-ounce South African Krugerrand is the most common gold coin on the planet and so normally trades at the cheapest premium over the spot price. Other good options are the sovereign and the Britannia. Both of these are still officially UK tender , which means that if you sell them at a profit there is no capital gains tax to pay.
Regardless of how you buy your bullion, there is no stamp duty or VAT to pay.
The Most Affordable Way To Buy Gold: Physical Gold Or Etfs
Marcus Reeves is a writer, publisher, and journalist whose business and pop culture writings have appeared in several prominent publications, including The New York Times, The Washington Post, Rolling Stone, and the San Francisco Chronicle. He is an adjunct instructor of writing at New York University.
Gold valued as a currency, commodity and investment for thousands of years is popular among todays investors because it can be used as a hedge against currency devaluation, inflation, or deflation, and due to its ability to provide a “safe haven” during times of economic uncertainty.
The gold market is highly liquid and there are a number of ways in which investors can gain exposure to this precious metal, including holding physical gold and exchange-traded funds .
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Best Places To Buy Online In 2021
Want to find out the eight best places to buy gold bars and coins online, and what each company offers? We’ve got you covered, but before you place your first order, be sure and review some of the most commonly asked questions by first-time investors.
Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Read our Advertising Disclosure.
Gold is increasing in price because of 2020 instability. Now is the time to invest, since buying physical gold bars protects you from inflation.
Gold is also a tangible asset, both portable and liquidable. Best of all, gold prices tend to go up even in a bad economy.
While it’s a no-brainer to invest in gold, many novice investors don’t know where to begin.
Is there a safe and ethical online company that lets you buy gold?
Do you have to store the gold you purchase, or can you own it, keeping it off-site?
What quantity of gold do most people buy?
Here, we will discuss buying gold bars and things you need to know before making your first purchase.
In this guide to buying gold bars, we will also list the eight best places to buy gold online and what deals they offer the new investor.
Beware Of Signs Of Fraud
While there are a number of legitimate ways to invest in gold, there are also a number of gold-related investment scams.
These scams my center on inflated claims regarding stocks of gold mining companies, claiming the stocks price is linked directly to gold prices. Or they may claim you can make a lot of money with little risk through a financing agreement, or that a company will store your gold for you.
You should always be wary of the seven red flags of fraud, but for more information on gold fraud, be sure to read this CFTC advisory.
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Price: Gold Bars Vs Gold Coins
In general, gold bars enjoy lower prices or premiums over the fluctuating gold price per ounce although the most economical price does not always win the day for gold bullion buyers.
Many gold bullion buyers will choose to pay a slightly higher price or premium per ounce or gram of gold to have a government guarantee and government mint hallmark.
If getting the overall lowest price is the most critical factor for your gold bullion buying, try buying highly respected private mint gold bullion bars like Republic Metals Gold Bullion Bars.
If a getting a low price yet having some government guarantee is essential to you, try Royal Canadian Mint Gold Bars.
In general as well, the larger the gold bar is the lessor its price per gold weight will be due to lessoned fabrication costs associated with large gold bars .
In terms of overall lowest price, in general, gold bars win out as they are typically slightly less costly than similar weight gold coins.
Trading Gold And Inflation
Money and gold may seem the same, and they can all be an equally acceptable currency, but they are different. Money is anything accepted as payment. Currency is often country-specific and is represented by paper notes issued by the government. It is money but it is not gold. Gold is money and a medium of exchange. Gold can be a currency, but it is also more than that, as it is a tangible asset and the only investment not monetized by debt.
Figure 4, below, shows the inverse relationship between gold and the U.S. dollar.
The next chart shows an inverse relationship between the U.S. dollar and the Swiss franc. The Swiss franc generally moves opposite to the U.S. dollar. The Swiss franc is positively correlated with gold. Correlations are a good management tool for making allocations in a portfolio.
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How To Store Gold Bars
Part of buying gold bars is where youll store them. While keeping some at or near home can be useful, you dont want all your physical wealth vulnerable to one act of misfortune.
The ideal solution is to keep what you think you might need in an emergency close byand then get the rest of your holdings out of the house, and yet still have it easily accessible at any time.
That option is available. Private, non-bank, fully allocated, fully-insured class-3 vaults offer the highest level of security and are the best way to keep bullion safe during times of financial and social crises.
Why Should You Buy Gold
Buying gold is a way you can diversify the types of investments that you hold. By diversifying, you are protecting yourself against the possibility that all of your assets will lose value.
Gold in particular is thought of as a safe kind of asset. Since gold has had value in some form for millennia, people generally are confident that it will continue to have value. If you are less confident in, say, paper currency or the stock market, then you may be interested in the safety of gold. Another plus with gold is you can expect little to no effect from inflation. Because the process of finding and extracting gold is long, its almost impossible for the supply to fluctuate in the short term.
An important thing to remember about gold is that it wont earn you any kind of lucrative return or interest. The price of gold moves up and down like any asset, but you shouldnt invest in gold with idea that your money will be earning lots more value. Gold should be one portion of your portfolio, not the whole thing.
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