Unlock the Secrets of Investing in Gold: Investor's Guide

Who can resist the alluring promise of gold? This precious metal has established itself as the universal symbol of wealth. As a safe haven asset, investors treasure gold for its ability to maintain or appreciate in value in the face of any market upheaval. So, how have investors successfully managed to leverage gold over the years to build their dream portfolio? Be on your merry way to unlocking the secrets of investing in gold with this guide! 

Gold permeates the timeline of human history. Its underlying value transcends individual cultures, governments, societies, economies, and currencies. There are three major reasons investors continue to confine 5 to 10% of their portfolio in gold holdings that we will explore here:

Gold as a Hedge Against Inflation

An investment that serves as a good hedge against inflation protects investors from the loss of purchasing power caused by inflation. This means that during periods of inflation, the value of the investment is anticipated to remain stable or even rise. Historically, as an asset, gold has performed commendably during periods of sustained, high inflation, which is defined at about 5% or higher a year. Even during periods of deflation, gold tends to lose value less rapidly than other assets.

During the 2008 Recession, the market economy witnessed a sudden and dramatic drop in equities. Usually, gold has a converse relationship with other equities in the stock market. When other securities plummet on stock market exchanges, gold prices are expected to counterbalance that. 

Gold prices didn’t soar in 2008. In fact, the price of gold went down briefly. However, investors that already owned gold were able to meet their unexpected liquidity needs and buy stocks on a margin. Gold was also able to quickly recover in a matter of days or weeks, whereas other securities like stocks, bonds, and CDs stayed depressed for months on end. We also saw this happen during the 2002 Recession, on Black Monday in 1987, and recently in 2020 with the advent of the ongoing inflation surge. Clearly, gold has a well-established track record as a hedge against inflation.  

Gold as a Means of Diversification

Gold is the closest investors can get to acquiring insurance for their portfolio. Holding gold in your portfolio is a prudent way to practice risk management. It reduces your overall losses when stocks, bonds, or real estate fall sharply. In the long run, gold offers competitive returns and sustains portfolio stability.

Gold as a Reliable Store of Value

Store of value refers to an asset’s ability to maintain its value over time. Gold has a high utility value. Its underlying, inherent value eliminates the risk of it becoming worthless. It’s outlasted and more valuable than any other currency in human history. Many governments and central banks hold gold reserves because of its reliability to be saved, retrieved, or exchanged in the future without depreciating. 

Investing in gold is not a get-rich-quick scheme. It is part of a well-balanced, wealth-building strategy that accumulates in value over time. Let’s take a look at some of the different ways you can invest in physical gold assets:

Gold Bullion Bars and Ingots 

Gold that is melted and poured into a mold describes bullion bars or ingots. This is a no-frills gold investment. Gold bars are stamped with the percentage of pure gold content it contains, a serial number, and where it was minted. Buying larger gold bars is essentially buying in bulk. Governments and central banks usually prefer them to gold coins because of their utilitarian investment purposes. You get more bang for your buck with lower premiums since manufacturing production is a more rudimentary process. However, smaller one-gram gold bars also provide a great investment opportunity to build wealth at a more budget-friendly entry point. 

Gold Bullion Coins

Gold bullion coins, like the Gold American Eagle, are struck with refined gold. Although many of these coins have a certain face value and can be used in circulation for commerce, for investment purposes, these coins are kept as a store of value, for diversification, and as a hedge against inflation. 

While they sell at higher premiums over the spot price, these coins are in high demand, making them extremely liquid. Plus, they could potentially go up in value with increased desire depending on their rarity or collectability.

Gold bullion coins are usually engraved with texts, images, and symbols that reflect their unique cultural heritage. Investors can locate information about the coin’s purity, fineness, mintage, and more on the obverse. Additionally, variations in value can occur depending on the coin’s grading or condition. They can be purchased in various sizes to meet a range of investment needs.  

Some popular, high-quality bullion coins from mintages worldwide include the Australian Kangaroo, the Austrian Philharmonic, the South African Krugerrand, and the Canadian Maple Leaf. 

Collectible Gold Coins

Gold coins that are obsolete in circulation but valued for their rarity and collectibility in the numismatic community comprise this type of gold investment. Demand for these coins drives their prices more so than the actual gold content contained within each one. 

Because their value is correlated with sentimental investor behavior, it’s important to store these types of coins the right way. Currently, the 1933 Saint Gaudens Gold Eagle is the most expensive gold coin in the history of the world, with an appraised value of $8,859,859 or more in Uncirculated (MS+) Mint Condition. 

It is also possible to keep your gold coins or bars in a Gold Individual Retirement Account (Gold IRA). This specialized, self-directed IRA allows investors to hold gold as a qualified retirement investment thanks to the purity of its precious metals content. This is a great, tax-advantaged way that helps investors save for retirement.  

It’s no secret that you should make sure to buy gold from a reputable and trusted precious metals dealer. The U.S. Gold Bureau’s team of Precious Metals Experts has undergone a comprehensive training program, allowing us to serve each client with the utmost integrity and expertise. 

We are authorized bulk purchasers of coins and bullion from the U.S. Mint. As a veritable and licensed dealer of investment-grade coins, we can ensure the origin, authenticity, purity, and quality of every product we offer. 

Now that you know the secrets of investing in gold, reach out to us today by phone at (800) 775-3504 or through our live chat to find out more about how you can leverage gold to build your dream portfolio.