Is Gold Investment Right For You? 4 Things To Consider

The ‘tears of the sun,’ as the Incas called this shiny, yellow metal. Gold had been mined throughout the globe since time immemorial. It’s probably the first precious metal that the early hominids found. It has always represented wealth and power; an enduring symbol that had brought not only wealth but also grief to the various civilizations that mined and used this metal.

The allure of gold has persisted through the ages. Not only is it one of the most beautiful metals, but it’s also extremely useful. Today, even though the gold standard had ceased to be the norm for many of the world’s currencies, the commodity is still the go-to asset for investors when times are uncertain–especially when times are uncertain. This is probably why a lot of investors today look to gold as a safe-haven asset and an inflation hedge. 

If you’re planning to invest, there are a few things you should consider before jumping in with both feet.  

Things To Consider When Investing In Gold

Gold’s prices may, sometimes, underperform, but financial analysts expect the prices to rally–they always do. Many investors believe that the best time to invest in this precious metal is when prices are low. This is especially true when a round of inflation is expected–gold historically performs well in times of inflation. There are opportunities galore every time gold’s price dips, and there are also many ways to invest in gold. You can learn more from this gold investment guide

Below are a few things to consider if you’re planning to invest in this precious metal:

  • Gold Stocks Aren’t The Same As Owning Physical Gold

Investing in gold stocks isn’t the same as investing in physical gold. With gold stocks, it could just be gold mining stocks that you bought. If so, you’ve probably invested in a gold mining company and not in the actual precious metal itself. 

Gold stocks can pay dividends, but only on certain equity-based gold exchange-traded funds (ETFs). There are several companies that offer dividend gold stocks, so you’d have to look them up if you’re interested to go that route.        

  • Gold Investment Risks

Gold may be a safe-haven asset, but it’s still subject to market forces. This means that the prices for this commodity can fluctuate. As an investor, it’s also essential to consider the risks and disadvantages that investing in this precious metal entails. An example is that you’d have to pay for insurance and storage costs for your hoard. 

With stocks and bonds, you won’t have to concern yourself with storage. If you have a gold IRA (Individual Retirement Account), the metal will have to be in a depository. The asset is insured, but you still have to pay the storage fee annually. Storing them privately, for example, in a vault or safe at your own home means you’d have to shell out for additional insurance in the event of natural disasters or theft.

Additionally, investing in physical gold doesn’t pay dividends, unlike stocks. You’ll only profit from this precious metal if you sell them. But you can use your gold deposit as collateral for loans.

  • Bars Or Coins?

If you’ve decided you wanted to own the yellow metal physically, you’ll have two choices: bars or coins. Bullion is in the form of bars or ingots and is certified and stamped as at least 99.5% pure gold. There are gold dealers who’d deliver your gold bars to wherever you want them stored. These shiny bars can be in many sizes; you can buy bars that weigh an ounce, ten ounces, or large gold bars that weigh up to a kilo. 

The large, 400 ounce-bar (12.4 kilos) is investment-grade bullion considered by the London Bullion Market Association (LBMA) as a ‘good delivery bar.’ A bar having this classification means it met LBMA’s requirements about weight, purity, dimensions, appearance, brand reliability, and others.  

Gold coins, on the other hand, can be more valuable than some bars. Many of these shiny coins have been legal tender and their traditional, as well as historical worth, add value to them. If you have an appreciation of these coins’ historical value, or you like collecting coins, then these coins are for you. Besides, they’re an excellent investment. 

The Krugerrands, which are gold coins that were minted in South Africa, are examples of this; they’re popular and easy to sell. The value of gold coins that are certified as rare and fine won’t be affected if the price of the yellow metal itself drops. The bars’ value, however, will take a hit in such an event.  

  • Safety First

You must also check sellers’ reputations. There are sites like the Better Business Bureau where you can check their legitimacy. The U. S. Mint also maintains a list of gold dealers. Don’t forget to check their online presence, too. Most of these companies have social media accounts. You can check their reviews online to ascertain their reputation. 

When it comes to physical gold itself, make sure to get them from reputable dealers. With legitimate precious metal dealers, you’d be assured of the product’s purity and quality.   

Conclusion

There are many ways to invest in gold. Typically, people invest in gold as an inflation hedge and security. This precious metal is known for being a safe asset to invest in during economic uncertainties. But gold doesn’t pay dividends, unlike stocks and bonds, except for some ETFs

Gold is generally considered a safe investment, but it’s not completely without risks. Thorough research and preparation before committing yourself can put you in a position where you have an excellent chance of success.

Steven Millstein
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