Gold bullion is a tangible asset you can hold in your hands, unlike more abstract assets like stocks. Additionally, this asset can easily be passed down from generation to generation within families if desired.
Physical gold may carry higher costs than more traditional investments; for instance, its storage at home or a private storage facility requires insurance – an ongoing cost that must be considered when budgeting.
1. Amount of Cash You Have
Your cash can affect both your decision to invest in gold or other assets and how you spend during crises like those currently afflicting the US.
The US government does not place legal limits on how much gold private citizens may own; however, tax regulations regarding precious metals can be complex. When purchasing gold bullion such as South African Krugerrands or Mexican Onzas you must notify the IRS.
This rule exists to prevent money laundering and other illicit activities; if your purchase of gold from a dealer utilizing checks or bankwires totalling less than $10,000 however, no report needs to be filed; rather the seller should complete Form 8300 instead.
2. Amount of Equity You Have
Gold can add significant liquidity to your portfolio. However, it’s essential that you understand how much gold you can own and how best to store it – not forgetting its associated storage costs, capital gains taxes and potential performance lag compared with other investments.
For instance, when investing in a traditional Gold IRA account with the IRS, they require you to store physical gold at an approved facility – something which can increase costs significantly and trigger tax events – including withdrawing funds from your retirement account and increasing taxes accordingly. Storing gold at home would cause similar complications but would increase taxes instead.
Selling gold bullion on the open market may not be in your best interests as it can be challenging to locate and transport it to potential buyers, plus you could face unscrupulous sellers advertising high prices for your precious metals.
3. Amount of Debt You Have
Gold’s appeal stems largely from its ability to act as an anchor during times of economic insecurity, and investors commonly purchase precious metals in order to reduce inflation risk or other factors that might negatively impact their investments.
Though gold bullion can be an excellent investment, it does come with some drawbacks. Converting physical gold into cash may prove challenging when necessary and it must be stored safely to avoid theft or loss.
There are various strategies you can employ to increase the liquidity of your gold portfolio without jeopardizing its safety or security. One such solution is investing in a traditional Gold IRA, which enables you to purchase gold pretax and pay taxes only upon withdrawing funds. Or you could store it privately with an approved depository or storage company.
4. Amount of Savings You Have
Gold investors must first determine how much physical gold they require in their individual circumstances. They should calculate how many ounces will be necessary to supplement or replace monthly expenses during a significant financial disruption.
To do this, individuals can determine how much is necessary to cover one year’s expenses and multiply that figure by the anticipated duration of a crisis. They should then add any other expenses they anticipate incurring during this time.
Investors looking for access to gold without needing to physically store it can invest in gold ETFs or IRAs; however, these investments come with their own costs and may not provide the same level of financial protection provided by physical gold. Furthermore, these vehicles can take days or weeks before selling an ounce.
