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Physical gold has been a valuable investment for many years. Gold is unlike many other assets. In fact, it’s something that can make you money over time and be a hedge against inflation.
Gold has always been valuable because it doesn't corrode, but what makes it so great?
Here are 10 reasons why investing in physical gold could be another investment in your portfolio.
What makes gold valuable?
When you decide on a gold investment, you are investing in something that will appreciate over time which can work out great for your future.If you're looking to invest in something that will hold its value, gold is considered by some a safe haven. It doesn't physically break down, has been desired, highly valued and used as money for thousands of years. It’s also a rare element that you cannot simply create more of. Purchasing gold can be the alternative choice to preserve wealth.
With inflation on the rise in recent years, commodities like gold are more important than ever before.
Reasons to invest in gold
The practice of adding gold to your investments has been done for literally thousands of years.
The value of gold has continued to increase over time, as has the gold demand. Many countries have central banks. These central banks are the largest buyers of gold on a global scale. It’s even argued (and relatively proven) the market price of gold is manipulated by these same central banks that are buying so much of it.
Many investors have turned to choosing the physical metal because it seems the price increase makes sense at some point in the future. When is that? No one really knows as there are many factors that may affect the price.
Reason #1: The Gold Price Does Not Go Down Over Time
One of the main reasons investing in gold is so attractive is because gold prices do not decrease over time.
When investing in gold, it's important to look at what the market is doing and how that will affect your choices. While investing in other things can be difficult when you want a more stable investment, using gold as an investment provides this stability and an effective hedge against the inflating US dollar.
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Reason #2: Gold Is Not Affected by Inflation
Gold is a great hedge against inflation. Many experts advise having a small percentage (say 10%) stake in gold. Although the price of gold remains relatively the same over the last several years, at some point the central banks will stop artificially keeping the price of gold low. One of the most prominent gold investors, Jim Rickards, says gold will hit the price of $10,000 per ounce in coming years. Now no one knows about the future results of gold but the math does seem to add up.
Reason #3: It Is One of Few Assets That Doesn't Depend on Someone Else
When you use any of the major currencies you always experience counterparty risk. This is a fancy way of saying the dollars you are using may not be worth what you think they are. Let me ask you this, what worth does a $100 bill really hold? It’s literally a piece of paper.
Gold gives you the ability to exit the banking system. There is no counterpart risk to owning gold coins because you don’t have to rely on anyone to make good on their promise. If you prefer to be independent of anyone else gold may be one of those other investments that you may consider.
Reason #4: You Can Take Advantage of Tax Breaks
Due to the appreciation of your gold over time, you can actually take advantage of tax breaks too. This means investing in gold can be beneficial to both your wallet and your peace of mind.
An example of the type of tax break you could take advantage of is the Gold IRA.
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A Gold IRA is a special type of IRA that allows investing in gold and other precious metals. With a Gold IRA, you may be able to avoid a tax penalty for early withdrawal from your traditional IRA if it is to purchase coins or bullion.
Reason #5: You Can Go Back to It at Any Time
Investing in gold is an investment that does not lock you into a long-term contract, which means investing in gold can be great if you anticipate a financial crisis or economic downturns. If there comes a time when you want to cash out your money and use it elsewhere, it’s simple.
Gold prices are the same in London, New York and Thailand. There is a “spot price” which in essence is how much an ounce of gold is worth in your local money.
You might have heard about how cryptocurrency investors can experience volatility and instability. Taking physical possession of gold is actually quite different from this. Investing in gold coins is a solid investment because you own physical assets.
Reason # 6: Physical Gold Can Be More Stable Than Any Currency
Gold may be one way of being prepared for what might happen if things go south financially, which makes it a very attractive option for those living in a period of political instability and price fluctuations due to inflation. Investments like gold can hold their value far better than the dollar because you cannot print more ounces of gold. During times when a financial crisis and negative news is everywhere gold is a safe haven similar to real estate.
Reason #7: Gold Is Easy to Buy and Sell
Investors can procure gold quite easily online today. I recommend using a reputable dealer to buy from. I’ve had a great experience buying many ounces from JM Bullion. It's also easier than ever for people who are interested in investing in gold but don't have a lot of money at their disposal because gold prices are based on fractional amounts of the metal instead of having to purchase large quantities that may not be affordable. This means you can buy ¼ of an ounce or even 1/10 of an ounce. When you’re selling there will always be a greater demand for a full ounce of gold.
I only really buy gold starting with one ounce as you will pay a premium for buying fractional pieces. This is the best investment you can make.
The internet is also a great resource for buying and selling gold. You have access to sites like the U.S. Mint, which you can use to buy gold as well as other investments and tangible assets like silver and platinum. I recently bought a few silver 2021 Morgan dollars and am quite happy with them.
Reason #8: You Can Add to Your Collection Gradually or in Large Amounts at Any Time
While investing in something like stocks requires a lot of money upfront (in some cases), investing in metals gives you the opportunity to purchase whatever amount you demant – whether that's $20 worth every month or multiple ounces of even gold bars! (I’m still saving for those gold bars).
Investing gradually means investing more than what someone might be able to afford all at once while still giving them the chance to grow their collection little by little. To me the price of gold at any given time doesn’t matter.
The real question is how many ounces do you have? If and when economic devastation hits, that’s all that matters.
Reason #9: Gold Is a Secured Asset Compared to Other Assets
Gold is a secured asset compared to other assets. This means that investing in gold is a great option for people looking to invest their money somewhere where they know it will be safe. Gold cannot disappear overnight like a stock market investment. Stocks are tricky. The market demand for gold keeps the market price relatively stable.
Investing a dollar in something tangible is one of the best options when you are trying to make smart investments because you can hold your wealth in your hands, no one can take it from you. Like any investment you don’t want to put all of your eggs into one basket to diversify your risk.
Commodities like gold are not only a great way to diversify your investment portfolio but also a good option for people who want tangible assets and don't want to rely on any government currency or anyone else (stocks included). The market demand for gold is rising steadily as central banks continue to fill their vaults. Market experts are in full argument if gold will go to $10,000 per ounce of $100 per ounce. The demand seems to be pointing higher but we’ll have to wait and see.
Gold as an investment may be a good idea for you. Make sure to do plenty of research and only choose investments that you understand.
Gold Investing FAQ's
Is Gold Expensive to Invest In?
Gold investing doesn't have to be expensive. You can buy fractional gold bullion coins or invest in a gold IRA for as little as $20 – which means you don't need thousands of dollars in order to purchase physical metals and take physical possession.
Can I Buy Gold Online?
Yes, buying gold online is easy and simple. There are many sites that allow people to purchase bullion, including the US Mint where you can buy all kinds of precious metal products like bars or silver & platinum. With today's technology it has never been easier to be an investor and put your money into something tangible without having to leave your home.
Is Gold Protected From Inflation?
Yes, investing in gold is a great way to protect your money from inflation. Gold can always be sold and exchanged for cash anytime, even if the economy isn't doing so well and people are looking for ways to keep their savings secure the demand for gold will always be there.
What Does Investing In Gold Mean?
You’re investing into tangible assets that will hold value over time as opposed to investing in the stock market or other types of currencies where those values may change quickly because it's not backed by anything like physical metals (which makes its value more stable).
Is Investing in Gold Better Than Investing in the Stock Market?
Gold investing is great for anyone who doesn't have the money to invest all at once because you can start investing little by little until you are ready to make your first big purchase. Investors in gold also (usually) can buy ounces with low premiums, which means it's not as expensive or pricey compared to investing in the stock market where prices fluctuate quickly leaving people constantly trying to cover their losses. I’ve heard people say that investing in the stock market is similar to gambling. May the cards be with you!
Is It Easy to Sell Gold?
Yes, gold is easy to sell because you can always trade it for cash whenever you need. Simply find a local coin dealer or pawn shop and you can sell your gold.
Are There Different Ways to Buy Gold?
There are many different ways to buy gold- investing in precious metals can include investing in coins, bars or even gold jewelry. Make sure when you are looking at different dealers to see what coins they have in stock You always have the option of selling your metals when you need cash which makes it just as liquid and accessible compared with investing stocks.
What is Bullion?
Bullion is a term used to describe investing in precious metals like gold, silver and platinum. Bullion investing usually involves buying bars or coins that are made of pure metal- but you can also invest in jewelry. Any investment that will get you started is great.
As a certified credit counselor and syndicated writer at MaxMyMoney, Max has coached over 250 Millennials to help take the stress out of money. When Max is not coaching, you'll find him reading financial books, indoor cycling, or visiting local pawn shops looking for swiss-made watches.