Are you ready to protect your wealth in today’s uncertain economic times?
If you’re reading this gold investing guide, you’ve probably been around long enough to know that relying on stocks and bonds alone won’t guarantee financial success. Individual stocks can be a roller coaster ride with market fluctuations, and if you don’t diversify your portfolio with precious metals like gold, those market swings will hurt you financially.
You’re not alone in these concerns. Over 77% of Americans worry about the economy, and 43% of investors are increasing their holdings in alternative assets outside the stock market. These trends show the growing shift towards investment strategies to protect wealth.
This article covers the different ways you can include gold in your investment strategy. We’ll share the pros and cons of each option so you can make the best choice for your situation.
Why you should invest in gold
The Swiss America team works with so many investors every day who want to own physical assets as a way to protect their wealth. Some of the most common reasons we see as to why people invest in gold include:
Hedge against inflation
Gold often retains its value when inflation rises, protecting purchasing power as paper currencies lose value. During economic downturns, gold’s value usually increases. For example, between September 1978 and January 1980, gold prices increased from $217 to $850 per ounce, far outpacing inflation rates of 12.5% in 1980 and 8.5% in 1981.
Protection against currency devaluation
When a currency weakens due to political unrest or excessive government debt, gold often remains steady or increases in value. This gives investors a way to store their wealth that’s not tied to a specific currency.
One of our long-term clients, who invested heavily in gold during the early stages of the 2008 financial crisis, shared how this decision preserved his wealth. As the dollar weakened, his gold holdings appreciated, allowing him to avoid the financial turmoil that hit many others who held other assets like real estate and stocks.
Portfolio diversification
Gold doesn’t follow the stock market. It’s independent of stocks and bonds and can reduce overall portfolio risk. When stocks go down, gold usually goes up. Adding it to your retirement portfolio helps spread risk and increases your long-term financial security.
No counterparty risk
When you own physical gold, you aren’t dependent on a third party, like a bank, for its safety. Financial and paper assets rely on a third party’s performance, but physical gold is fully in your control. This verifies that even if a financial institution fails, your gold remains secure since it’s not linked to another organization’s success or failure.
During Silicon Valley Bank’s collapse in 2023, one of our customers faced a severe liquidity crisis when his funds were suddenly inaccessible. However, because he had invested in physical gold, he was able to maintain financial stability. Unlike his bank-dependent assets, his gold remained secure and liquid.
Potential for capital appreciation
Gold can increase in value, especially during economic downturns when prices often go up, allowing investors to sell for a profit. From 2014 to June 2024, the average cost of gold rose from $1,244.27 to $2,326.44 per troy ounce, an 87% increase.
Gold recently reached $2,700 an ounce, and as we discussed on our podcast, we predict it will go higher soon:
Ways you can invest in gold
There’s a few different ways you can hold gold, each with its own advantages and considerations. Your choice impacts your investment’s performance, liquidity, and overall alignment with your financial goals. Which are the best gold investment types for you? Let’s look at the options and pros and cons for each:
Gold bullion and coins in a non-retirement account
The first option is to invest in physical gold, such as bullion bars and coins, outside of a retirement account.
Pros:
Direct ownership: You hold the actual metal, which can provide a sense of security. It’s an asset you completely control.
No cyber risk: Since your gold doesn’t rely on internet access or any other online system, your investment has zero risk from a cyber attack or issue.
Portable: Gold’s high value in a small form makes it highly portable. Say gold is $2700/oz and you own a 10oz bar. This is about the size of a deck of cards. So, that means you can easily carry $27,000 worth of gold in your pocket.
Cons
Storage and security: Keeping gold safe requires secure storage, such as a home safe or a bank’s vault, which adds extra costs.
Non-liquidity: Selling physical gold can take longer than other gold ownership types. The good news for Swiss America customers is that we buy back gold to help our customers to liquidate their gold when they are ready to sell.
Insurance expenses: You’ll want to purchase insurance in case of theft or loss.
Gold IRAs
Gold IRAs are individual retirement accounts that include physical gold or other precious metals. These investment vehicles provide many tax benefits and are a popular way to own gold.
Pros:
Tax advantages: Gold IRAs offer similar tax benefits to traditional IRAs, including tax-deferred growth and potential tax deductions on contributions.
Tangible assets: You still own the physical gold in your IRA.
Long-term stability: Gold has historically maintained its value over time, providing much-needed stability to your retirement savings.
Cons:
Higher fees: Gold IRAs may have higher fees than traditional IRAs like storage, insurance, and custodian fees.
Price volatility: Gold prices can be volatile in the short term, but it only impacts your investment if you need to sell quickly.
IRS rules: Gold IRAs are subject to specific IRS regulations regarding the types, purity, and storage of metals allowed. Violations can result in penalties.
Other ways to invest in gold
You can also invest in gold through paper assets like:
Gold exchange-traded funds (gold ETFs)
Gold mutual funds
Gold mining companies (gold stocks)
Gold futures
This allows you to invest in gold without actually owning the metal. An investment like a gold exchange-traded fund has some limited protection under the Securities Investor Protection Corporation (SIPC), but this protection does not include market losses.
These paper gold investment types come with management fees and less control, leaving you reliant on market conditions and fund managers.
3 easy steps to gold investing
Buying physical precious metals like gold is one of the simplest and least risky ways to start investing in this asset class. Here’s how you can get started:
Step 1: Choose a reputable gold dealer
Look for gold companies like Swiss America with solid reviews and credentials. Verify their licensing and registration with relevant authorities. For a Gold IRA, you want a company that can help you with every step of the conversion process.
Step 2: Choose your investment type
Decide between physical gold bars or coins, or both, depending on your goals. Coins can be more accessible and easier to trade, while bars may offer a lower cost per ounce.
If you decide to leverage gold for retirement savings, consult with a financial advisor or gold experts like the Swiss America team on the rollover process. We can provide guidance for 401(k) rollovers, converting an existing IRA or setting up a new one.
Step 3: Buy gold
Compare prices and premiums. Make sure you receive documentation and authenticity certificates for your gold.
If you are buying gold outside of a retirement account, store your gold securely in a home safe, bank deposit box, or third-party facility. For IRA accounts, you’ll use an IRS-approved depository for storage arranged by your custodian.
Why Swiss America
For over 40 years, Swiss America has helped clients through market shifts and economic cycles with gold investments. We advise on secure storage, precious metals IRAs, market trends, and more.
Our fair, transparent pricing ensures you know exactly what you’re getting. And our clients appreciate online access to see their transaction history, real-time market value, and trade-in pricing quotes.
Investing in gold: secure your future
Gold offers stability and diversification for your portfolio, especially if you’re thinking about or in retirement. Since gold is not a paper asset, it’s less affected by stock market fluctuations and can increase in value during chaotic financial times. This is why many investors rely on gold to preserve and grow their wealth.
Or, as one Redditor put it, “Gold is insurance against problems with the financial system. It is good to have a small portion of your wealth in it. You want coins, not funds or paper products.”
There are many excellent reasons to start investing in gold, and it’s never too late. Contact our team to get started investing in gold today.
Gold investing guide: FAQs
Is investing in gold a good investment?
Investing in gold can be a good option if you want to diversify your portfolios, guard against inflation, and preserve wealth during economic uncertainty.
How to invest in gold for the first time?
Consider starting with a small allocation in physical gold like bars or coins or a Gold IRA.
Should I invest $100,000 in gold?
Investing $100,000 in gold depends on your financial goals, risk tolerance, and need for diversification. While gold can provide stability, most experts recommend holding 5-10% of your portfolio in this precious metal.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
