Do you believe that the economy is healthy or are we all going to heck in a hand basket? Why you should buy gold, and more importantly, how much gold you should buy will have a lot to do with how much confidence you have in the economic future.
Do you believe the stock market can keep breaking record highs and the Fed can just keep printing money without consequence? Then by all means, keep adding more stocks to your portfolio. If you believe that interest rates will always be low and our unemployment problem is over, then stick with the stocks.
Is this what you believe? Then you’re an eternal optimist.
While there are number of vehicles available such as gold mining stocks, ETFs, and close-ended funds, none of them confer the advantages of owning physical gold. One of the problems with buying these other less “pure” versions of gold is how indirect they are as a means of owning gold and all of the other liabilities that go with them. Gold stocks have all the problems of the stock market which negates gold’s ability to diversify your portfolio into another asset class.
When you buy a mining stock or an ETF, you’re investing in the overall health of the company which is subject to all of the hazards of the industry.
When you buy the physical metals, you know exactly what you’re paying for.
Apart from its qualities as a hedge against market, currency, and inflation calamities, gold is also––next to cash––some of the most liquid stuff on Earth. No other investment is nearly as liquid. It’s one of the most recognizable benefits of owning physical metals is that it’s so easy to get in and out of, even within a gold IRA. This liquidity is one of the reasons that owning physical metals is very popular in many parts of the world. In many developing countries, in fact, it is much preferred than holding the local currency.
Gold Should Be a Part of a Diversified Investment Portfolio
Historically, gold’s value increases in response to events that cause the value of paper investments like stocks and bonds to decline. While gold’s price can experience some volatility in the short term, it has always maintained its value over the long term. This has been true for thousands of years.
If you’re a large-scale investor with pockets as deep as Warren Buffet’s, then gold bars are a simple and efficient way to invest in gold. For the rest of us, gold bars are not as flexible when it comes to selling. For example, if you’d want to sell off 100 grams of a kilo bar, it’s not going to be easy to slice off the end of a bar. Also, the choice of buyers will be far more restricted as the seller will need to find a larger dealer. It is also more unlikely that a private buyer will be found as most people are not familiar with gold bullion bars.
Gold investment coins, on the other hand, are available at very competitive prices compared with similar sized bars.
Avoid coins from private mints and only purchase bullion coins produced by government mints. Because gold coins are universally recognized, they are usually easier to resell.
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