Are you worried about market instability or inflation weakening your savings? Many people turn to gold as a safe haven asset to protect wealth. But what’s the best gold to invest in? We cover all the options here.
As global uncertainty continues to increase, more people buy gold to hedge against inflation and currency fluctuations. In fact, the price of gold is up 30% this year, and as of this writing, it’s $2700/oz. Back in September, Goldman Sachs Research said that gold would reach this amount in early 2025, and it’s already here.
Why is that? This article covers why we’re seeing this demand right now. You’ll also get the details on how you can invest in gold if you want to add some of this safe haven asset to your portfolio.
Why invest in gold?
Earlier this year, J.P.Morgan private bank analysts shared, “The best possible reason to own gold in our view is as a diversifier in a portfolio.” No matter how you’re feeling about what’s going on in the world, gold gives you a way to reduce risks.
Here’s why:
Gold acts as a hedge over inflation
People usually see gold as a reliable hedge against inflation. When the cost of goods rises, gold prices often rise, too. So, as the cost of goods and services increases, your gold potentially holds enough value to cover the higher costs.
This isn’t always the case. In fact, we didn’t see this dynamic during high inflation in 2021-2022, so it’s not always a given. But, owning physical gold still provides other benefits and a way to protect your wealth from chaos which can happen at any time.
Gold retains value
One of the top reasons to invest in this precious metal is its ability to preserve wealth over time. Gold’s value doesn’t depreciate over the long term, so you can store it and sell it later. Consider that an ounce of gold 100 years ago could buy a high-quality men’s suit and it can still today.
Demand for gold
There’s only so much gold on the earth which means when demand increases, the price goes up. Demand comes from central banks, investors, industry uses and gold jewelry. Right now, foreign country banks are buying gold at a higher rate than in the past ten years of sanctions risks and Federal Reserve rate cuts.
If you want to see central bank gold buying activity, you can view the current reserves by country on the World Gold Council website. As of October, 2024, the data shows the biggest increases in countries like Poland, India and Turkey.
Independent asset
The value of gold investments doesn’t follow the same pattern as that of other assets. This independence makes it a great way to diversify your portfolio. The stock market might crash, and real estate prices might tumble. Neither of these investment areas impacts the gold market.
If anything, chaos in these areas leads more people to invest in gold.
Ways to invest in physical gold
You can buy physical or paper gold assets, but physical gold gives you a way to own a completely independent tangible asset. No other way to invest in gold gives you these same benefits:
Complete control: You are in complete control of your gold assets. You don’t need institutions or digital platforms to access your gold. And you don’t need a company, a bank, or any other third party to perform for you to own your gold.
No cyber risk: If you purchase gold bullion, you’re immune to cyber security failures or attacks. Your physical gold doesn’t need an internet connection or secure password for you to access it.
Portable: As of this writing, gold is around $2700/oz. One ounce is equal to about the size of a domino. So you can easily carry several thousands of dollars in pure gold with you wherever you go. And, since almost every country recognizes gold, you can easily trade it for cash anywhere in the world.
In the Reddit r/explainlikeimfive forum, user The_Elusive_Dr_Wu shared the reasons why people consider gold valuable:
“Gold has close to 6000 years of history being valued by humans. Not much else can say that except food, water and shelter..
Gold is globally recognized and accepted. Offer people an equal value of gold and crypto, I’d bet more will take the gold.
Gold is portable and small. My entire stack can fit in two coat pockets. A one ounce gold coin takes up less space than $2000 USD
Gold is not held on a disk which could fail, or an institution which could deny access to it or wipe it away with a few clicks.
In a true SHTF situation, gold and silver will stand above any currencies or assets except the things people will truly need to survive: food, water, power, ammunition.
At anytime outside of SHTF scenario, it can be quickly liquidated in just about any city in the world.”
Types of physical gold
You can buy physical gold bullion in the form of coins or bars.
Gold coins
Coins come in various sizes ranging from 1/20 oz to 1 oz. Note that investment coins are different from collectible coins. Collectibles are more for hobbyists with values that don’t correlate to the price of gold. Bullion investment coins have value because of their gold content.
Common investment coins include:
South African Gold Krugerrand
Canadian Gold Maple Leaf
Austrian Gold Kangaroo
Gold bars
Bars also come in several different sizes, from 1oz to 100oz. People buy gold bars over gold coins when they have a larger amount to invest and need a more compact way to store their gold.
Common gold bar brands include:
PAMP Suisse
Credit Suisse
Royal Canadian Mint
Valcambi
Metalor
Types of accounts
You can buy actual gold with retirement funds or outside of a retirement account. If you want to buy gold with retirement funds, you’ll roll over a portion of your 401(k) or existing IRA. Investing in gold this way means you’ll choose a self-directed IRA custodian to manage your account under your direction.
You can buy gold from a reputable dealer that meets IRS-approved rules for purity. From there, your custodian handles secure storage with a depository. You can’t actually take possession of your gold until you reach the retirement age of 59 1/2 because the IRS considers possession as a distribution, which triggers tax consequences.
Other ways of investing in gold
You can also buy gold in the form of paper assets like:
Gold mutual funds or exchange-traded funds (ETFs)
Gold mutual funds hold stocks in a variety of gold assets.
Gold ETFs hold physical gold or a variety of gold-related assets like stocks of gold mining companies. You buy shares that correlate directly to a unit of gold through a brokerage account.
A gold ETF doesn’t protect you from third-party risk because it relies on several management organizations to do their job. You don’t actually have physical ownership, you do have cyber risk and you’ll have exposure to financial system issues.
Gold mining stocks
Owning shares in a gold mining company is another way you can invest in gold. When gold prices rise, the value of the companies can increase as well. Also, if the mining company increases the volume of gold they extract, it can lead to even greater profits and increase the value of your investment.
The challenge with gold mining stocks versus owning physical gold is that you do have to rely on the company to perform well. If they have operational issues that impact their management, production, or even sales capability, this impacts your financial returns.
Gold futures
Gold futures offer a way to speculate on the price of gold without physically owning the metal. You can potentially profit from rising gold prices without the need to buy or store gold.
One of the main advantages of futures is the use of leverage. This allows investors to control a larger amount of gold with a smaller initial investment. The challenge with leverage is that it can also amplify losses if the market moves against your position.
If you decide to trade gold futures, be aware that they carry significant risks. Suppose the market moves against your position; you may get a margin call, requiring you to deposit more money to maintain your position. And, if you can’t meet the margin call, you’ll face losses.
Why gold investors choose Swiss America
If you want to invest in physical gold assets, consider working Swiss America to help you buy gold or other precious metals. We’ve been in business for over 40 years, and our clients love working with our team. Some of the reasons customers choose us include:
Educational resources: We provide a number of resources to help you make the best decision about buying precious metals. This includes evaluating options, learning about Gold IRAs, and how to store and insure your gold. You can catch our regular podcasts, read our in-depth research reports, or subscribe to our daily gold market news updates.
Credentials: Our clients appreciate the security of working with a gold dealer who has credentials with the American Numismatic Association, Industry Council for Tangible Assets, and Numismatic Guaranty Corp, among others.
Buy-back program: We offer a buy-back program for clients in case you ever need to sell your gold. This option gives you a quick route to exchange your assets for cash.
Visibility: You can leverage our online portal to see the market status of your gold in real time. You can also view transaction history and potential gold trade-in rates and get investment recommendations.
How to invest in gold final thoughts
Investing in gold protects your wealth and helps guard against inflation and economic instability. If you want to own the best investment for diversification and protection, it’s physical gold.
To learn more about how to get started, connect with the Swiss America team today!
FAQ
Is it really worth it to invest in gold?
Yes it can be. Gold doesn’t have the same reaction to economic downturns or crisis as other assets so it can help diversify your portfolio from risks.
How do beginners buy gold?
You can buy physical gold through a precious metals dealer or paper assets like gold stocks, mutual funds and ETFs through a broker.
Can I invest $1,000 in gold?
As of this writing, with $1,000 you can buy physical gold coins in smaller sizes like 1/10 or 1/4 ounce. You can also buy paper assets like shares in a gold mining company or Gold ETFs.
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.
