Gold is usually
investors’ go-to asset when economic challenges or global issues disrupt the
markets. With surging prices and the markets
facing uncertainty, some investors seek a safe investment with a history of
excellent gains, such as gold.
So if you plan to own
gold, you don’t need to use your own closet for that. Instead, what you need to
store your gold is an investment account.
What You Need to Know
About Investing in Gold
Gold can’t offer you
the means to significant profit. Looking at the last five years, gold prices
have climbed about 36%, while the S&P 500 has gained 104% in the same
period.
The hype surrounding
gold is not due to its potential for returns. Rather, it’s because of the
yellow metal’s ability to serve as a safe haven from inflation and severe
market declines. For example, the US 2007-2008 bear market saw the general
stock market fall 33%, while gold only recorded a 2% loss.
Still, gold prices have
a volatile nature, making gold an investment that is not 100% safe. You can
even build a well-diversified portfolio without gold. However, if you seek to
put some of your money into gold, do it in a way that it only covers a small
percentage of your investments.
3 Ways to Own Physical
Gold
Bullion/Bars
Better known as
bullion, gold bars are an excellent option if you intend to invest in gold.
Investors can buy bullion per gram or ounce, and the bar’s purity,
manufacturer, and weight should be indicated on its top face.
Purity, in particular,
is crucial to gold, as investment-grade gold bars need to be at least 99.5%
pure. That becomes more important if you’re looking to keep your bullion in a
gold individual retirement account (IRA). Bars with lower gold content cannot
be stored in an IRA, except for a pre-approved gold coin.
Bullion is available to
purchase from dealers, individual sellers, or online. Note that there may be
delivery charges and insurance fees involved to ensure the safe transport of
your gold bars.
Coins
Collector’s item gold
coins such as the American Eagles and Maple Leafs will require you to pay a
premium over what you would pay for the same number of gold bars you’re
holding.
Additionally, gold
coins usually have less purity than bullion and are sold by dealers, pawnshops,
and reliable individual sellers.
If you decide to buy
gold coins online, make sure it’s an authorized dealer included in the US
Mint’s list. You would not want to pay for fakes or gold with a lower content
than what you were told, regardless of whether you plan to purchase gold coins
directly or online.
Jewelry
Gold jewelry,
especially the antique ones with higher purity, offers investors another way to
invest in the precious yellow metal. However, like gold coins, you may need to
pay additional fees for the amount of gold you’re actually buying, depending on
the producer.
Furthermore,
manufacturers tend to mix gold with other metals – i.e., alloying – to make
their jewelry last longer or adjust their colors.
You also need to confirm
whether the individual you’re purchasing gold jewelry from is legit. For
example, jewelers part of the Jewelers of America is bound by a code of conduct
that requires them to practice honesty and
transparency on the makeup of their jewelry.
Lastly, if you’re
looking to resell your gold, you need to gather as much certification as
possible to prove its quality.
