What are the main benefits of investing in gold? Gold has been one of the most profound investment assets of our times, owing to its unique benefits. In today’s article, we shall take a look at what the main pros of investing in this precious metal are, so sit tight till the end to get valuable insights.
Gold is Money
Although gold is no longer used as a currency, its role as money makes it superior to any other currency. In fact, gold has been used as money for longer than any other currency in history. Gold has been used as a store of value for at least 3,000 years, while the British Pound, one of the oldest currencies in history, is only about 1,200 years old.
One of money’s most important promises is that it will serve as a long-term store of value. This promise is better fulfilled by gold than by any fiat currency.
There is no counterparty risk with gold.
There is no need for a paper contract if you own gold bullion. A third party or middleman is not required to fulfill a contractual obligation. This is because gold is the only financial asset that is not also a liability of another entity. This is significant since gold will be the last man standing if bubbles burst or a crisis happens. When things spiral out of control in your nation or economy, that’s a valuable tool to have in your portfolio.
It also means that gold will not fall to zero. This has never happened before in its 3,000-year history. That’s a strong feature, particularly if you ask former stockholders of long-fallen companies such as Bear Stearns, Enron, or Lehman Brothers.
Gold is a tangible asset.
When you buy physical precious metals, you can hold them in your hand, which is not possible with most other assets. Real gold cannot be destroyed by fire, water, or even the passage of time. Moreover, unlike other commodities, gold does not require feeding, fertilization, or maintenance. Another advantage of gold as a tangible asset is that it cannot be hacked or erased.
Physical gold, unlike brokerage accounts, bank accounts, and payment services such as credit cards, is not accessible to cybercriminals. It’s highly advisable to have some of your fortunes outside of digital form in today’s world. If the internet goes down or your online world goes down, the physical gold you own is unaffected.
Gold is both liquid and portable.
Gold is also suitable because it is simple to sell and can be kept in your pocket at all times. Gold is extremely liquid. Almost any bullion dealer in the world will recognize a gold Eagle and will purchase it from you. You can sell it to a coin dealer, a private individual, or an online dealer. It is always possible to sell it for money or exchange it for goods.
The process is often quicker than selling securities through your brokerage account—it typically takes 3 business days for settlement before money can be transferred to your bank account or a check mailed.
Gold can be easily passed down to future generations
When you invest in gold, you can easily pass on this investment to the next generation. As you can see, most people give gold ornaments to their children at weddings and other significant events in their lives. This can also be a good option if you want to save money in gold and have it available for future needs. You can even give them to your children when transferring your assets, which will be beneficial to their future. It retains its natural shine even after many decades, and its market value remains constant regardless of its age.
Gold as an asset to diversify your portfolio
Many people have no understanding that putting money in gold is an awesome way to diversify your portfolio. We’ve previously stated that the price of gold performs exceptionally well including during uncertain times. As a result, including gold in your investment portfolio is a great way of balancing volatility and returns.
More importantly, by including gold in your portfolio, you can safeguard yourself from a “wealth wipeout” in extreme circumstances. No serious economic depression or market crash will wipe out your investments – gold will most likely still be standing tall after the dust settles.
Gold necessitates no specialized knowledge.
Can you identify a genuine diamond? Can you tell which of the two paintings is a forgery of Van Gogh? What stamps, baseball cards, and antique furniture pieces are the most valuable? None of this is required for gold bullion. There are no special skills, training, or equipment required. You can purchase rare gold coins, but this is a collector’s world that most investors should avoid. You’re not speculating on a numismatic coin someday bringing a higher premium than you paid; you’re making an investment in gold bullion to safeguard you from a financial crisis and a loss of purchasing power of the dollar. There’s no need for rare coins.
Gold Can Be Confidential and Private
In today’s world, how many assets can you say that about? If you want some privacy, one of the few investments that can provide it is physical gold.
It is important to note that any profit must still be reported on your income taxes. Gold is one of the few investments that can be made in complete anonymity. No one has to know you own it if you don’t want them to. This advantage is not available with almost any other asset.
Let us not delude ourselves. You attempt to invest in any assets because you intend to make more money, and with that comes the genuine fear that your investment may eventually be worthless. Obviously, when it comes to gold investing, that fear diminishes. For example, if the stock market crashed again as it did in 2008, you’d be bankrupt if your portfolio consisted solely of stocks, bonds, and mutual funds.
This is why, during times of uncertainty, whether geopolitical tension, financial, or economic, investors look to gold as a safe haven.
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Frequently asked questions on “What are the main benefits of investing in gold?”
What are the different ways of owning gold?
One of the primary differences between investing in gold a few hundred years ago and today is that there are many more investment alternatives available, including Gold Futures, Gold Coins, Gold Companies, Gold ETFs, Gold Mutual Funds, Gold Bullion, and Gold Jewelry.
When is the best time to buy gold?
In today’s economic landscape, worldwide tensions are high, political upheaval in the West continues, relentless cybersecurity threats continue, low-interest rates and rising inflation, not to mention the serious impact of the Coronavirus pandemic; it’s safe to say that we are living in uncertain times. Investing in gold is usually a good idea when one of the following conditions exists:
- The stock market is losing confidence, and banks are becoming unstable.
- Political conditions at the global, regional, and national levels are all uncertain.
- Other financial assets are losing value.
Where should I buy physical gold?
One of the most popular methods of purchasing gold is through precious metal dealers, some of which can be found online. You will be able to compare the exchange rates of many investors with gold exchanges on the Internet if you take this route. Avoid purchasing gold at a discount or from pawn shops.
Because gold comes in a variety of forms, one may be better suited to your investment strategy than another. Physical gold coins or bullion can be purchased, but they must be kept in a secure location. This may entail paying a fee to a broker, bank, or other firms. Investing in gold securities is similar to investing in any other security, with the exception that prices may fluctuate in tandem with the stock market.
If you buy shares in gold mining companies, for example, the share price may portray the company’s financial health and market position more than the price of gold. If you use it as a risk hedge, it can give you a false sense of security.
That will be all for today’s post on what the main benefits of gold are. I hope that you found it insightful and that you now understand why more people are rushing to purchase and hold gold. If you have more questions about today’s topic, drop them in the comments section so that I can respond to them ASAP. Do not also forget to check out the resources within the article.
I wish you well,
Eric, Investor and Team Member at Gold Retired!