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Gold is considered a highly valuable commodity for many investors because it provides them with a safety net during recessions. When currency-backed assets such as equities or properties drop in value due to inflation, likely, gold would still retain most of its value. As you can see, gold-related investments provide insurance to your portfolio as an investor. This type of investment is not designed for individuals who are anxious about their investments’ daily performance. Rather, it’s perfect for investors who may want to carry their wealth through the next generations. But it is important for safely investing in gold.
Is it still a good idea to invest in them during the 21st century? If you’re serious about considering gold-related investments, then these six tips should help you safely invest in gold:
- 1 Why Invest In Gold In The 21st Century?
- 2 Tips For Safely Investing In Gold
- 3 The Bottom Line
Why Invest In Gold In The 21st Century?
Many investors choose to focus on gaining wealth through other forms of traditional investment such as stocks and bonds instead of prioritizing gold-related ones. You should know that gold helps diversify your portfolio. It provides you with life insurance against economic upheavals.
When the coronavirus pandemic hit the world in 2020, gold-related investments proved their worth even more. This was one of the few kinds of assets that held its value despite the global health crisis, which dragged the economies of many countries to their lowest.
If you’re one of the individuals who secured gold-related investments way before the pandemic, then you’re in a relatively safe spot. Investing in gold in the 21st century is still a good idea, and it’s been gaining more attention recently, so you better plan your way through safely investing in gold.
Tips For Safely Investing In Gold
There are many ways that you can invest in gold. It’s important that before you fully decide on investing in gold, you also determine which form of gold would be the right investment for you. The safest ways of investing in gold include physical investment, virtual, and other adjacent gold-related investments such as mutual funds or exchange-traded funds (ETFs). Let’s discuss this further below:
Physical gold investment is probably the most traditional way of safely investing in gold. It’s quite liquid as it can be bought and sold easily from banks, among other places. The most common physical gold assets are gold bullion, gold coins, and gold jewelry.
Gold bullion and coins are relatively the same. The major difference would be their form, as gold bullions usually come in bars worth over USD 100,000 for the larger ones; whereas, coins may come in smaller sizes and prices. Note that for security purposes, gold bars would normally have serial numbers attached to them.
Gold jewelry, on the other hand, is much more convenient to own. You don’t have to worry about storage or put an insurance policy on it unless you find the need to do so. Any piece of gold jewelry with a purity of about 14k or higher would be a good investment. Be aware that your jewelry’s purity would determine its cost. So it’s crucial to acquire pieces from reputable dealers where you can obtain some certification.
You must have to know how to test gold or hire a professional who does because every missing gram could cost you thousands of dollars. Please note that the major risk of buying gold physically is getting defrauded on the piece’s actual gold content.
Purchase Stocks From Gold Miners
You can invest in stocks from a gold mining company. With this form, you have to invest in gold mining companies such as Goldcorp, Barrick Gold, or Newmont Corp. Keep in mind that the value of the share of stock you initially invested in would depend on gold prices and that particular company’s profitability and expenses.
Similar to investing in any stock, this type of gold-related investment would carry certain levels of risk.
Gold Mutual Funds And Gold ETFs
This form of gold investment may offer you more liquidity compared with physical gold investments. Investing in gold mutual funds and exchange-traded funds or ETFs doesn’t necessarily mean that you’re investing in gold directly.
This type of investment may not perform as well during economic downturns.
Alternative options to exposing yourself to gold investments include purchasing options or futures contracts, cryptocurrencies, and other foreign exchange trades. These alternatives tend to be riskier, so it’s meant for investors who are far more experienced. When purchasing future contracts, please note that they’re usually time-limited, and your main goal is to buy or sell securities at a set price before they expire and turn worthless.
Although the last three options provide you with much convenience for not having to deal with the hassle of storing physical gold assets, it’s crucial that you’d be well-versed with the stock market first because knowing exactly how it works would help you avoid hurting your investment portfolio in the future.
See also: 10 Smart Budget Tips for Your Small Business.
Spot A Poor Investment
Gold-related investments don’t really have a perfect time. However, it’s better to purchase them when the prices are still low. If you bought gold assets before the economic upheaval caused by the recent global health crisis, then those must have been your best investments so far.
Gold becomes a poor investment when you’re not fully prepared before purchasing it. There are things that you have to consider before safely investing in gold. Such as the way you would store it, your investment goals, and if you’ll be able to manage gold certificates efficiently. You can protect it from vanishing in case a bank suddenly goes into liquidation.
Gold can become a poor investment if you’re looking for fast returns. Keep in mind that this type of investment requires patience for it to mature well. Storage and insurance might also be big problems because additional costs should be considered when purchasing physical gold assets.
Physical gold assets can be quite a hassle to invest in because you’ll have to think about storing them properly. If you only have a few physical gold assets, then you may store them near you in a safe at your home or even bury them somewhere nearby where you can find them.
However, the safest choice to store your gold investments would probably be in a safe deposit box in either a bank or an international storage infrastructure that you trust. Determine your chosen vault operator follows the best practices for storing your gold assets in terms of surveillance and overall protection system.
By choosing this, you should also ensure that you’ll secure your investment with some insurance. This is to reduce the risk of storing it somewhere away from you. With a solid insurance policy, you can have your verified vault operator liable for any physical loss of your gold assets.
Buy With Savings
Gold-related investments can act like life insurance. So it’s only sensible that you only purchase them with your savings instead of credit. Avoid making it a habit to buy physical gold on credit.
You never know when the market may betray you. You might have to pay back your debt even before your gold investment matures. Remember, gold prices don’t do well for fast returns. So this investment is only suitable for those willing to wait for the prices to rise as it matures.
Be Part Of A Bullion Market Ecosystem
If your goal is to purchase a newly minted gold bullion safely, you’ll have to identify whether the gold was refined by a reliable refinery that a bullion market association lists. The major bullion market associations in the world include the London Bullion Market Association (LBMA) and the Singapore Bullion Market Association (SBMA).
Being part of their ecosystem means that you get access to their chain of integrity where you can safely buy, sell, and store your gold assets. To be part of an ecosystem, you might have to store your gold assets in vaults that any association member within their chain operates.
Comply With The Law
Wherever you are, you should always choose to be compliant with the law when purchasing gold. It’s possible and legal to purchase gold anonymously. If you’re planning to own large amounts of it, there are laws that you might have to follow. It might be necessary to declare ownership officially.
To simply put, being compliant with the law keeps your gold-related investments safe from being confiscated in the future. So, you must check out the laws about owning gold in your area or wherever you may be storing it.
The Bottom Line
You’re looking to purchase gold-related investments as a hedge against inflation. Then investing in physical gold assets may be the right choice for you. However, you can also try other forms of gold investments. Stocks and trading futures slowly expose you to this form of investment.
It would help if you were wary of how you invest in gold. Hopefully, these six tips would be able to guide you to safely investing in gold.
Determine the right moment for you to invest in gold. What exactly are the things you should consider before investing? Be compliant with the law and part of a major bullion market ecosystem. It might guarantee you some safety net when purchasing gold-related investments.