How do I invest in gold in the USA? Does investing in gold offer any benefits, or should I stick to other types of assets that are available in the USA? In today’s article, I will take you through this interesting topic, to help you gain information that will help you get started on the right foot as a gold investor in the US. Read on to discover more.
Gold as an investment asset
Gold is viewed as a perfect alternative to regular paper assets such as stocks and bonds. For years, it has held its reputation as a safe haven, in that investors often depend on it during times of market volatility and economic uncertainty. There are several ways in which you can gain exposure to gold, including the purchase of gold ETFs, funds, and bullion. Many investors, including some of the seasoned ones on Wall Street, recommend having a portion of your portfolio invested in gold.
What does it really mean to invest in gold?
When an investor says that he or she owns gold, they typically mean that they hold one or several of the assets listed below:
- Shares of gold mining companies
- Physical gold bars and coins
- Gold ETFs
- Gold Futures
Today, there are close to 20,000 metric tons of above-the-ground gold in the entire world, which is valued at about $11 trillion (based on data from the World Gold Council).
Why should you bother to invest in gold?
One of the main reasons that you should consider purchasing gold to add it to your retirement investment portfolio is that it can cushion your wealth from market volatility and economic uncertainty. This is not to mean that gold prices are not volatile in their own nature, but the overall net effect for those who hold gold over a long-term horizon is the stability of their portfolios.
Gold prices have been observed to rise during times of uncertainty, more so those resulting from economic and geopolitical shocks. This helps to offset the decline of the stock prices owing to the market turbulence.
You can, as such, turn to gold to hedge against fast-rising inflation. With the higher consumer prices, it takes more dollars to buy the same amount of gold, which in turn boosts the price of this yellow metal. Fast-rising inflation often leads to the weakening of the dollar, which in turn creates the opportunity for overseas investors to buy dollar-denominated investments like gold.
Gold is also perceived as a counter-measure to the falling interest rates. Generally, the lower interest rates make gold quite appealing to investors since it offers a better opportunity for investors to better returns in comparison to assets such as government bonds.
How to Invest in gold in the USA
My best and highly recommended approach to investing in gold has been to purchase standardized gold bars and coins, which are referred to as bullion. You can access them from internationally recognized dealers, or you can simply open a gold IRA and get help from a reliable custodian in accessing them. Purchasing gold is way easier now that we have access to gold bullion dealers’ websites through the internet, though I would highly recommend that you open a gold IRA so that you can receive all the guidance you need from the IRA experts.
With a genuine physical gold dealer, you can expect that the authenticity of the gold they sell has already been verified. They partner with coin agencies and mints such as The Royal Canadian Mint, Perth Mint as well as the U.S. Mint, to source legit precious metals in a bid to ensure that gold investors do not have to worry about quality.
Buying gold mining stocks
You can also invest in gold through purchasing shares that are offered by gold mining companies such as Barrick Gold Corp. Gold stocks can be purchased through brokerages. In most cases, the prices of gold mining stocks often rise and fall with the price of gold, but they’ve historically been observed to be more extreme.
This essentially means that with the rise in gold prices, investors can expect a significant increase in share prices, at a faster rate. Unfortunately, as the prices of gold drop, investors can also expect their shares to lose value faster.
Another thing you should know about gold mining stocks is that they are subject to the influence of other factors including the reputation of the mining company. A company that has an impressive balance sheet and that is respecting miners’ rights is bound to have better performing share prices, in comparison to a company that has poor leadership and several cases of miner deaths or accidents.
Purchasing gold Exchange Traded Funds
Exchange-Traded Funds, or ETFs as they are popularly abbreviated, are also a legit way to invest in gold. With gold ETFs, investors usually hold paper assets that track the price of gold, without them having to purchase and hold the physical gold. You can easily begin investing in gold ETFs through a brokerage account, just as you would do when purchasing and investing in shares.
Note that not all gold ETFs have physical gold as the underlying asset. Others have gold futures contracts, which essentially give the investor the right to purchase gold at a certain price on a given date in the future. The risk associated with gaining exposure to gold through purchasing gold ETFs is significantly higher than that of buying and holding physical gold, but it also comes with the potential for greater rewards.
Ready to begin investing in gold as a US citizen? Check out the reviews of the top-recommended gold IRA companies through which you can purchase and hold physical gold.
That will be all for this article in which we have responded to the question, “How do I invest in gold in the USA?”. Hopefully, you gained enough information to help you decide how to go about it. If you still have burning questions about investing in gold, let me know so that I can share a few suggestions and links to legit companies that you can partner with on this new journey of investing in alternative assets.
I wish you well,
Eric, Investor and Team Member at Gold Retired!