- 10 Jan 2023
- Bonds
- Precious Metals
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Gold is a popular investment option for those looking to invest their money into a relatively safe asset. The general idea behind investing in gold is that it has not just been used throughout history but continues to be used today.
People have often turned to invest in gold when they see any signs of economic instability or when geopolitical tensions, like the Russia-Ukraine crisis, cause market chaos. This is because it is seen as a way to protect their money from the risks associated with investing in stocks or another type of investment vehicle.
Gold is a popular investment because it has always been thought of as being valuable and representing value. That's why it has often been used to create jewelry and other precious items denoting wealth or prestige. Because of this, people believe there will always be a gold market even if economic situations change.
It is possible that people will not want to continue to purchase stocks and other types of investments where some or all of their money is tied up for long periods. For those looking for the stability of having some portion of their capital available at all times, investing in gold might be a good idea.
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Reasons Gold Is a Good Investment
Gold is a good investment option for many people for various reasons, regardless of the state of the economy. Gold's numerous desirable and singular properties explain why it has been a preferred investment for millennia.
Gold Helps Preserve Your Wealth
The ability of gold to maintain purchasing power is one of its most attractive qualities. Throughout the thousands of years that gold has been prized, numerous cultures and empires have risen and fallen.
Some of these communities even issued their currencies, which are now largely of historical interest. The opposite is true with gold, which retains its monetary worth and is still actively traded.
Gold Offers Protection Against Inflation
Gold has long been viewed as a haven asset, protecting against inflation and market volatility. Gold's value is not reliant on the performance of any country's economy or government, making it appealing to investors looking to safeguard their wealth.
Historically, gold has been used as a medium of exchange and as a store of value, and its use as a hedge against inflation dates back to ancient times. During periods of economic uncertainty, when the value of fiat currencies and other investments may be in flux, gold can maintain its value.
The forces of supply and demand often determine gold's value. Gold prices typically follow suit when inflation rises because people tend to buy more as a hedge against rising prices. This can be seen in recent years, with the price of gold hitting record highs in 2020 as the U.S. dollar weakened due to concerns over inflation.
Gold Helps You Diversify
Gold's unique attributes make it a smart addition to any investment portfolio, particularly in times of uncertainty. As the price of gold has risen over the last year and a half, many investors have seen their holdings in the yellow metal rise in value.
Gold can be helpful for those looking to diversify their investments because it offers something different from stocks, bonds and real estate.
Because gold is an asset that can be held directly or through a gold IRA, investors also enjoy tax benefits. Gold's unique qualities make it a worthy investment when other investments are too expensive.
Gold Offers Potential for Growth
As the price of gold rises, so does its growth potential. Gold's potential for growth has helped keep its price high since mid-2012, as it has demonstrated an ability to increase in value over and above inflation.
Investors who buy gold as a hedge against inflation may view this as a great reason to buy more gold, keep buying the asset and support the idea that the price will continue to rise over time.
Gold's price in U.S. dollars is another factor that tends to boost its value amid inflation. When inflation in the United States, the dollar falls and it becomes cheaper for people with foreign money to acquire gold. This may boost gold prices. For this reason, gold is a superior savings vehicle compared to hard currency.
Gold Gives You the Ability to Invest in a Physical Resource
Gold is a physical, tangible commodity found in the ground. This means that it is genuine. It is easy to understand why gold has been so popular throughout human history to invest in something of value.
Those looking to keep their money safe and secure may feel good about investing in gold because they can see it or even hold it in their hands like jewelry or bars and know that it has intrinsic value.
Gold's scarcity also makes it valuable and hard to come by. The fact that it cannot be easily replicated is also part of gold's appeal to investors.
How to Invest in Gold
Being familiar with the appropriate gold investments will enable you to decide if they are suitable for your investment portfolio. Here are some of the ways you can invest in gold.
Gold Bullion
Gold bullion, which consists of coins and bars, is the most widely recognized form of gold investing. Gold bars are 99.5% pure gold and typically cost between $500 to $5,000, depending on their weight. Coins generally cost around $100 to $1,200 per coin.
Many investors buy gold bullion marked as .999 fine (24 karats), which signifies that it weighs 24 karat gold and was produced by a recognized mint (like the United States Mint). The value of gold is based on its weight, which means that lower-grade gold bars and coins are worth less.
Gold Futures
Those who would like to buy and sell gold in the future can do so through a futures contract. An investor can purchase a contract with an agreed-upon price in advance and then buy or sell the contract at a later date, depending on whether they think the price of gold will be higher or lower when the contract expires.
Futures contracts can be traded online but are more complex than stocks and bonds because they involve a separate company that helps to facilitate the trade.
An investor benefits when the value of gold increases. They would also benefit from market volatility, often when interest rates are low. Those interested in futures contracts should speak with a broker or financial advisor to better understand the process and what it entails.
Gold Exchange-Traded Funds (ETFs)
An ETF tracks the price of gold and offers investors a more straightforward way to invest in gold without buying or selling futures contracts. An investor can purchase shares of an ETF for a small investment, and unlike gold bullion, an ETF does not need to be stored in a vault. ETFs are also less expensive than buying gold bars.
ETFs can be purchased online and traded just like stocks. They can be sold at any point in time, although their value may vary based on the price of gold at that time.
Gold-Backed Mutual Funds or ETFs
Gold-backed mutual funds and ETFs are available for investors who want to invest in gold without having to deal with storing the physical metal itself. While gold-backed ETFs make it easy to trade gold without having to deal with a futures contract, mutual funds offer investors physical bullion.
Mining Stocks
Investors may buy mining stocks directly, allowing them to own a share of the gold that has already been mined and is on its way to the market. While mining stocks are riskier than gold, they can be lucrative investments, particularly for those who want to get involved in physical gold investing but do not want to buy or store actual gold bullion.
How Investing in Gold Can Affect Your Taxes
The IRS taxes all income, regardless of its source. You will be taxed on the profit you make when selling an investment like gold.
Those who sell gold coins or bullion and have owned them for less than a year before selling must pay short-term capital gains tax. If they have held the investment for over a year, they will be taxed at the capital gains rate instead. This is important because if you sell your gold after holding it for less than a year, you will be taxed at your ordinary income tax rate.
If you make a profit, you will only be taxed on it if you make money from the sale. This is known as income tax deferral and cannot be accomplished through an IRA. The IRS defines income as any profit gained from the sale of an investment such as gold.
The profits from holding gold are known as capital gains, treated as short-term capital gains. If you have held onto your gold for a year or longer, you will not be taxed as heavily. It is therefore wise to hold onto your investment for at least one year.
Recommended Companies to Help You Invest in Gold
Several companies specialize in investing in gold. They can help you manage your investment and offer a wide range of gold products to support. Here are some companies that you may want to consider.
#1. Goldco
Goldco is an excellent choice if you're looking for a company to help you invest in gold. They are a leading gold and other precious metals provider, offering various products and services.
Goldco's knowledgeable and experienced professionals can help you make the most of your gold investments. From buying gold coins and bullion to setting up a self-directed IRA, they have the expertise and resources to ensure you get the best out of your investments.
The company also offers a range of advice and educational resources to help you understand the gold market and make informed decisions about your assets. Their customer service team is available 24/7 to answer any questions.
Augusta Precious Metals is a legit gold IRA company offering physical possession and paper assets. They provide a complete array of precious metals, including physical gold, silver and platinum bullion bars and coins, along with numismatic coins that are unique investment art pieces.
You can also purchase a variety of investment-grade silver rounds from the APM Mint brand. Many of their products are eligible for storage in your self-directed IRA.
American Hartford Gold is an excellent choice for those looking to invest in gold. They provide gold coins, bars and bullion in various sizes and weights, as well as storage and delivery options.
They are committed to providing clients with secure and convenient ways to add gold to their portfolios. Their gold is all sourced from LBMA-approved refiners and has an authenticity guarantee.
American Hartford Gold provides a wide range of services that make investing in gold easy and risk-free. They offer portfolio consultation, personalized advice and guidance on choosing a good investment for your needs. They also have an online store to purchase gold coins, bullion and other physical gold products.
With American Hartford Gold, you can rest assured knowing your gold investments are secure and backed by quality customer service.
#4. Birch Gold Group
Birch Gold Group is one of the leading companies that offer gold investing services. They provide a wide range of services, from helping investors purchase gold coins and bars to storing and safeguarding gold bullion. They are also known for their competitive pricing and excellent customer service.
Birch Gold Group is registered with the Financial Industry Regulatory Authority (FINRA) and is licensed to operate in all 50 states. They provide secure storage for gold investments, allowing clients to store their gold in the form of 1oz or 10oz gold coins, 1kg gold bars and 1oz silver bars. They also provide secure transport and delivery of gold investments and insured shipping.
Their gold investment services include guidance on how to invest in gold and other precious metals and education on the various gold investments available. They also provide access to a variety of gold coins and bars, as well as access to a host of other precious metal investments.
Clients can also benefit from online tools and resources to help them manage their investments and make informed decisions.
Birch Gold Group is also a leader in providing precious metals-backed IRAs. They offer both traditional and Roth IRAs and specialize in helping clients diversify their retirement portfolios with gold and other precious metals. They also assist with setting up accounts, transferring funds and managing investments.
#5. Noble Gold
Noble gold is one of the top recommended companies to help you invest in gold. They offer a wide range of gold investment options, including physical gold, gold-backed IRAs, precious metals mutual funds and more. The company provides secure storage, insurance and other services to ensure your gold investments are safe and secure.
Their team of professional advisors can provide guidance and advice to help you determine the best gold investment strategies for your financial goals. They also offer low fees and fast delivery times, making them an excellent choice for those looking to invest in gold.
Final Verdict
Gold can be a great way to diversify your retirement portfolio and protect yourself from potential financial crises. If you're looking for someone to help you invest in gold, our recommended companies can help you get started on the right foot. These companies provide various gold investment products and services, so they can meet your needs and ensure you're getting the best value out of your investments.
