Are you tired of the unstable stock markets and desire a means to diversify your portfolio?” Gold investments might be your best bet.
Gold, popularly called the king of metals, is one of several precious metals with enormous value. The metal has maintained its reputation as an asset of class for the high and mighty. And since its first appearance in over 3000 years, men, kingdoms, and government authorities have coveted the precious metal.
Today, there are several reasons why people add the asset to their investment portfolio. Besides the fact that it is precious and holds high value, it is stable and can retain value. Also, this is one of the reasons why most banks have their assets stored in gold. So, we can see it as insurance against economic failure.
However, you will need to register with a company to invest in it. This is because such investments are under strict regulations and require the services of a professional, but the outrageous number of companies in this industry makes it hard to find one that meets your demand as a beginner. You can read the USA Gold review to find a company that might be best for you.
As a beginner, there are several ways to buy gold. However, in case you are still on the fence about investing, this article will expose you to some of its benefits and ways to invest in it.
Benefits of Gold Investments
There are several benefits of buying precious metals. Below are four facts that can help guide your investment decision.
It Retains Value
Precious metals, unlike paper assets, are known for keeping the value of investments intact. In addition, the metal does not rust and can take any form after melting. And since it is not subject to most demand and supply laws, it is not affected by economic events.
Vast Investment Options
There are several ways investors can buy gold assets besides physical bars and coins. For instance, you can purchase jewelry, bullion, bond, mining stocks, and more. Therefore, this offers investors a variety of investment options. We will discuss gold investment options later in this article.
Also, since physical gold comes in various forms, you can choose which one you prefer holding. For instance, you might not like gold bars because of their weight and for fear of exposure to thieves. However, you can purchase coins.
Safe Haven Investment
This is one of the top benefits of gold investments. Precious metals do not correlate with any currency; they are not directly affected by inflation and economic crisis. Due to this, several investors convert part of their investment portfolio to gold for value preservation during unfavorable market conditions.
During high inflation, the stock and currency markets suffer sharp falls, and this makes them lose their purchasing power. However, as more people seek to purchase gold, its value increases.
The financial markets suffer huge price swings due to political conditions. For example, the Wall Street crash of 1929 led to the loss of several investment capitals, much of it borrowed. However, precious metals are not subject to economic factors, and they can stabilize your portfolio. You can click on https://en.wikipedia.org/ to read more about the 1929 market crash.
Gold Investment Options
Generally, investors can purchase this asset using three popular methods – physical bullion, ETFs, and Futures. For instance, small pocket investors can buy a futures contract, while bigger investors can buy physical bullion. So whatever category you fall in, everyone has a chance at the golden cake.
Bullion refers to any physical gold in forms like coins that are round and rectangular bars. Though they are expensive to purchase, investors can easily buy them from a brokerage, bank, or dealer.
Furthermore, you can purchase bullion ranging from half an ounce to over 400-ounce. However, coins are much smaller and attract new investors more.
Investors can either purchase freshly minted or numismatic coins. While numismatic coins refer to old, minted coins and have more value, newly minted coins are best for beginners. This is because they are in more circulation and have maximum liquidity. Therefore, you will not find it hard to sell them off.
Buying bullion requires secure storage and insurance. This is to help preserve your investment against cases of loss or theft. However, ensure that you use a regulated depository for storing your bullion. You can click here to read more about depository facilities.
Furthermore, investing in jewelry provides you with some benefits of gold investments. Though they have more market value when compared to their melt-down value, they are also a better way to pass down some fortune to generations yet unborn.
Sentiments add value to the jewelry as it moves down a family line, making it more expensive than its face value. However, it is best to determine the quality of the precious metals in the jewelry to avoid fraud.
Exchange Trade Funds (ETFs)
Besides the benefits of investing in bullion, there are also some challenges. For instance, you need to pay for storage, insurance, transaction fees, and more to invest in bullion. However, you can choose a low-cost and liquid option – ETFs.
ETFs are one of the popular ways to enter the metals market. And investors can easily purchase and trade them from the NYSE (New York Stock Exchange) platform.
You should note that investing in ETFs does not give you access to physical gold. However, each share represents about a tenth of one ounce of gold. So, if the metal trades at $2,000 for an ounce, a single ETF share will be $200.
Futures contracts offer investors the opportunity to trade the metal at a particular future price. However, this option is best for professionals who can predict future price movements.
Also, trading futures offer you higher leverage which can be both beneficial and detrimental to your account. This is because leverages provide you with more purchasing power. However, it exposes your account to higher risk. So, a wrong prediction in price can wipe out your entire investment capital.
Investing in precious metals is a sound investment decision. And it can guarantee you a future of wealth. However, purchasing bullion might be expensive, so there is a need to explore other options.
There are three popular investment options for beginners. They are Bullion, ETFs, and Futures. Though the benefits are mouth-watering, it is best you research well before proceeding.