Jason is a longtime Investor and an advocate for having a personal finance strategy and personal savings to have financial freedom.
Gold is always a hot topic in the investing world, especially during times of economic uncertainty and high inflation. Additionally, gold has continued to be tested by time and continuously regarded as an important asset to hold. In this article, we will discuss if gold truly is as important as it is regarded to be, if it is an important investment to have in your portfolio, the different ways you can invest in gold, types of gold, and my personal thoughts on the subject.
Holding Gold As An Investment
Unlike stocks and real estate for example, that are meant to exceed the rate of inflation over time, gold tends to stay consistent with the rate of inflation or in the rare occurrence of deflation. It is intended to be an insurance policy for your wealth. In theory, if you bought into gold in 1950, that amount of gold you bought then can buy you the exact same thing in 2020. While the US dollar for example continues to lose value over time and can be in infinite supply, gold continues to hold a consistent value over time and has a limited supply. So when investing into gold, it is not intended to be something you buy into and become extremely wealthy from in the future, rather it helps to protect the wealth you have and helps to keep your wealth inflation proof.
Ways You Can Invest Into Gold
Gold can be invested into multiple ways. Typically, the two most common ways are holding the physical gold in your possession or purchasing gold through an exchange that will hold it in a vault for you and will present you with a certificate indicating how much gold you own. You can even invest into a gold fund if that is your preference. All can have positive and negative reasons when making the decision for which you prefer.
Holding physical gold in your possession is the most guaranteed way to know you really have it and you are in total control of your gold investment. The only real downfall is you are 100% liable for your gold, so if you lose it, it is totally your responsibility. Protect your gold if you hold it physically.
Having your gold stored in a vault can be a good way to take the responsibility of holding your gold personally out of your hands. It is intended to be stored in a secured location. The downside to this is while you have a certificate that indicates how much gold is yours in the vault, you have no way of truly guaranteeing if it is there for you. If it happens to be in another country, your investment is at the mercy of whatever that country's government decides to do with gold. It is known for governments to confiscate, or even outright ban its citizens from owning gold. If you decide to hold your gold in a vault, make sure to do your due diligence and research with placing your faith into someone else holding your investment.
Other ways you can invest into gold is through a gold IRA, mutual fund, or other retirement funds. You can even invest into a company in the stock market that specializes in gold or gold mining. You will not be investing directly into physical gold in your possession, rather third parties that happen to be in the gold business and manage gold for you. Like any other company in the stock market, gold companies can go out of business or be subjected to controversy, so make sure you do your research like you would do for any other company.
Types of Gold
Gold can be purchased in various forms. You can buy it in bars, coins, or through jewelry for example. It all comes down to personal preference. We always see the ads on TV showing the minted coins that are put out by the government. You can also invest in old coins that at one time were used as everyday currency. Invest into the type of gold that you can manage and know best.
So would I recommend investing into gold? Holding a portion of your portfolio in gold is always a smart choice historically, and has no end in site for the future. It is not something to put your entire net worth into, but holding a slice of your pie in gold can help guarantee a portion of your wealth will be preserved. Of course you can invest into other commodities, such as silver, which we will go into for another article. With the uncertain future of the US dollar and many other world currencies, gold will continue to retain its value and be a valued currency of the future. Many currencies have came and gone since the dawn of humanity, but gold has continued to stay on top and has no signs of changing.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2022 Jason