Gold’s resistance to inflation makes it an effective asset, serving as both a store of wealth and protection from financial or political crises.
Governments can overreach in these trying times, freezing accounts and seizing assets without warning. Gold offers an inconspicuous form of wealth that provides protection from such danger.
It’s a store of value
Physical gold has long been considered an asset worth holding onto because its purchasing power remains intact over time. Furthermore, gold can serve as a safe haven during times of economic instability by acting as an insurance policy against devaluations or inflation in other forms of currencies or asset classes.
Physical gold can be costly to own; its storage costs money and requires security precautions against theft. Furthermore, dealers charge making fees and sales taxes when selling gold bars and coins – making paper gold more economical to own than physical.
Investors can purchase physical gold bullion, or exchange-traded funds (ETFs) that track its price, for exposure to gold. ETFs offer a low-cost and liquid way to gain exposure; SPDR Gold Trust (GLD) holds physical gold to back each share traded like stocks; it is suitable for brokerage and IRA accounts, and each share represents fractions of an ounce.
It’s a currency
Though purchasing physical gold can provide diversification benefits for your portfolio, its costs can be significant. Storing it in either your home or bank safety deposit box incurs both storage and insurance expenses that reduce returns over time. Furthermore, physical gold does not produce income in the form of interest or dividends like stocks and bonds do.
An ETF or bullion fund that tracks the price of physical gold allows investors to gain exposure without worrying about storage and purity issues, making this type of investment much more liquid than physical gold itself.
Purchase of financial assets has numerous advantages, one being their independence from government or banking systems, with each asset purchase/sale occurring privately and confidentially. This feature can be particularly valuable during times of crises; gold has never gone to zero while most paper currencies have seen their value decrease over time.
It’s a hedge
Physical gold can serve as an effective hedge against inflation. It’s a popular choice among investors seeking to diversify their portfolio and protect against potential financial adversities, with its negative correlation to other asset classes providing yet another value-add asset to any portfolio.
Investors interested in purchasing physical gold can purchase it from private mints or precious metal dealers, then store or invest it into an IRA for tax advantages. Furthermore, physical gold can be sold or liquidated whenever market fluctuations warrant such investments.
Investors seeking an economical alternative to futures contracts should purchase gold options from a reliable broker. Gold options are less costly than futures contracts and allow investors to select which price they wish to hedge against, in real-time trading mode.
It’s an investment
Gold has long been considered an investment. Physical gold can serve as a store of wealth, unlike stocks or bonds which provide dividends or interest payments; similarly it does not guarantee fixed returns but may increase in value as other assets fall. Furthermore, keeping physical gold outside the financial system may be desirable to some investors, unlike investing in paper gold (like ETF shares) which can be subject to counterparty risk and government interference.
Physical gold can also be easily liquidated, making it ideal for family inheritance planning. Liquidating physical gold is similar to selling stock but requires much less paperwork and time before receiving payment in your hands. Furthermore, its minimal costs such as storage fees, third-party storage charges, and capital gains taxes make it a highly attractive asset to keep in your portfolio.