Is buying physical gold worth it?

Physical gold is one of the best forms of long-term wealth protection. It's ideal for your heirs, as it will last longer than any currency they may use in the future. Physical gold is not subject to the risks associated with paper assets. It cannot be hacked or erased.

Some consider gold to be the best investment insurance policy. Gold-traded funds or mutual funds have more liquidity than those that hold physical gold and offer a level of diversification that is not offered by a single stock. Compared to paper stocks, physical gold gives investors the ability to physically hold the investment over which they have full control at all times. Bullion can allow you to use your investments in gold and silver as a defensive tool against uncertainty and as an offensive gain when other investments fall.

Once your account is funded, you'll be able to choose the gold-related assets you want to invest in and place an order on your broker's website. Gold is reputed to be a recession-friendly investment when the stock market retreats sharply and the price of gold often rises. Properly diversified investors combine gold with stocks and bonds in a portfolio to reduce overall volatility and risk. But while he is clear that he doesn't think investing in gold is a good idea, Smith does recognize the attractiveness of physical metal.

And while it may be the most exciting way to invest in gold, it's also the most difficult to buy, store and sell. Much of the supply of gold on the market since the 1990s has come from the sales of gold ingots in the vaults of global central banks. The opportunity cost of investing in physical metals instead of dividend-rich stocks could be considered another drawback. Samuel Mather-Holgate, advisor to Mather and Murray Financial, says that gold has been an intrinsic store of value for centuries, making it a useful hedge against inflation, and a reference asset in times of uncertainty.

Owning stocks in a gold mining company or a gold ETF exposes you to the gold industry and, since gold doesn't necessarily move in conjunction with the stock market, it can help to further diversify your shares. Although gold is no longer used as currency in the modern world, the precious metal yellow has been a store of value for at least 3000 years. Gold atoms are heavier and electrons move faster, which creates the absorption of some light; a process that had to decipher Einstein's theory of relativity. Gold traders usually charge more than the “spot” price of gold, or the price at which it is listed on a commodity exchange.

To buy stocks or gold funds, you'll need a brokerage account, which you can open with an online broker (here's a step-by-step guide to opening a brokerage account).

Christine Raiford
Christine Raiford

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