Is gold a good investment? Why should I buy gold bullion? It’s natural and even prudent for an investor to wonder if a particular asset is a good investment or not.
That’s especially true for gold, since it’s an inert metal and doesn’t earn any interest. However, the reasons for owning physical gold go beyond the possibility of its price rising.
Gold bullion offers distinct advantages that simply can’t be found in almost any other investment. These advantages give you power as an investor. And yes, one of these reasons is because the price is poised to rise significantly.
Here are the top 10 reasons why every investor should buy a Gold IRA consisting of gold bullion, with an emphasis on investment implications:
1. Gold is Money
Gold is not used as a currency today, but its role as money makes it superior to any currency. In fact, gold has been money longer than any currency in history.
Gold has been a store of value for at least 3,000 years, while one of the longest currencies in history, the British Pound Sterling, is about 1,200 years old. Even the United States of America has used gold as money more often than not in its history.
Gold’s price fluctuates, but its value is timeless. Consider how gold will preserve your purchasing power over the next, say, five years compared to your currency.
All paper currencies, by their very nature, lose value over time. The dollars you save in your bank or brokerage account will continue to seep purchasing power.
2. Gold is a Tangible Asset
If you buy physical gold, you can hold it in your hand, which is something you can’t do with most any other investment. Real gold can’t be destroyed by fire, water or even time.
Unlike other commodities, gold doesn’t need feeding, fertilizer or maintenance. And since there’s only so much gold available, it has an inherent value that these other commodities don’t have.
Producing vs. Storing: The Misunderstanding of Gold
Those that criticize gold because it doesn’t produce income misunderstand its role in a portfolio.
It isn’t gold’s job to produce income: it functions directly as money and as a store of value. This is also why gold shouldn’t be viewed as just another commodity.
Gold doesn’t get “used up” like oil or corn. In fact, almost all the gold ever dug up is still in existence.
3. Gold Has No Counterparty Risk
If you hold gold bullion, you do not need a paper contract to make it whole. No middleman or other party is necessary to fulfill a contractual obligation.
That’s because gold is the only financial asset that is not simultaneously some other entity’s liability.
This is important because gold will be the last man standing when bubbles pop or a crisis hits. That’s a powerful tool to have in your portfolio when things start to go wrong in your country or economy.
It also means gold won’t go to zero. It’s never happened in its 3,000+ year history. That’s another powerful feature, especially if you asked former shareholders of companies like Bear Stearns, Enron or Lehman Brothers.
Gold will always have value. You can always sell it if you need currency. Physical gold cannot go bankrupt or broke. Gold bullion will never default on promises or obligations.
4. Gold Can Be Private and Confidential
How many assets can you say that about in today’s world? If you want a little privacy, physical gold is one of the few assets that can provide it.
Gold is one of the very few investments that can be anonymous. If you choose, no one has to know you own it. Virtually any other investment you may make does not have this benefit.
Note that you must still report any gain on your income taxes. Still, if you want a private or confidential form of wealth, gold is one of few assets that can offer this.
5. Gold Is Liquid and Portable
Gold is also ideal because it is easy to sell and can be carried in your pocket anywhere you go. It is also highly liquid. Virtually any bullion dealer in the world will recognize a gold Eagle and buy it from you.
You can sell it to your local coin shop, a pawn shop, a private party or an online dealer. It can always be sold for cash or traded for goods.
The process is frequently quicker than selling a stock in your brokerage account. It usually takes 3 business days for settlement before cash can be transferred to your bank account or a check mailed.
And other collectibles, like artwork, could take longer to sell, have a smaller customer base and would likely entail a big commission. But with gold, you can get cash or goods in hand on the spot with no hoops to jump through.
This liquidity means you can take gold with you literally anywhere in the world. And if you’re uncomfortable crossing a border with it, you can buy gold you can transport.
Investment Implication: Gold is easily convertible to cash and can go with you anywhere.
6. Gold Is Easy to Store and Comes With Low Maintenance and Carrying Costs
One question that comes up with physical gold is the cost of storing it. But while professional storage does come with a fee, vaulting charges are typically low.
And compare a small storage bill to the costs and headaches of, say, real estate.
Just lock your gold away until you need it — no late renter payments, calls to fix a broken toilet or complicated tax issues.
Keep in mind that gold is value-dense. That means it packs a lot of value in a small space. You can hold $50,000 of gold in the palm of your hand or store it in a small space in your home.
And at any price above $1,200/ounce, you can store more value in a safe deposit box with gold than with stacks of dollar bills.
Gold storage is low maintenance, low-cost and requires little storage space.
7. Gold Requires No Specialized Knowledge
Can you spot a real diamond? Can you look at two paintings and tell which one is the fake Van Gogh? What stamps, baseball cards and antique furniture pieces are more valuable than others?
Gold bullion requires none of this. No special skills, training or equipment are needed to buy or recognize gold bullion.
You can buy rare gold coins, but this is the world of the collector, which most investors should avoid. You’re not speculating on a numismatic coin someday fetching a higher premium than what you paid; you’re investing in gold bullion to protect you against crises and shield you from a loss in purchasing power. You never need to buy rare, numismatic coins.
Buying gold bullion is relatively straightforward. If you’re not sure what to buy, start with this easy guide. No special skills or expertise is needed to buy physical gold.
8. Gold Can Protect Against Nefarious Politicians
You don’t have to be a conspiracy nut to understand that governments sometimes overreach. They can freeze bank accounts, garnish wages and even confiscate funds. Talk to people who were victims of these actions and they’ll tell you they had no warning.
These crimes inevitably increase during times of economic or financial crisis. The government desperately needs revenue and they tend to be more aggressive in their enforcement.
Or they simply pass new laws and regulations to suit their needs at the time. It’s happened with virtually every government in history, and it’ll happen again, especially in a crisis situation.
Investment Implication: International gold storage is simple to implement and can provide financial flexibility and investment options outside your home country.
9. Gold Hedges Your Stock Market Investments
Want to hedge the stocks you own? Do you sometimes worry the stock market might crash? Gold may have an answer for you. This chart shows gold’s correlation to other common asset classes since 1975.
The zero line means gold does the opposite of that investment half of the time. If it’s below zero, gold moves in the opposite direction of that investment more often than with it (and vice versa if above zero).
The data shows that, on average historically, when the stock market declines, gold will tend to rise more than to fall. This inverse correlation holds true even when the stock market has crashed.
Check out how gold performed in the eight biggest stock market declines since 1975. You can see that in most cases, gold rose when the S&P crashed. (Gold’s only significant selloff was –46% in the early 1980s, occurred just after its biggest bull market in modern history.)
It’s true that the gold price initially fell in the shock of the 2008 financial crisis. However, while the S&P continued to decline, gold sharply rebounded and ended the year up 5.5 percent.
Over the total 18-month stock market selloff, gold rose over 25 percent. Gold doesn’t automatically rise with every downtick in the stock market, but history shows it is sought as a safe haven in big stock market declines.
10. Gold Will Protect Your Portfolio in Times of Crisis
One of gold’s strongest advantages is that it can protect your investments — even your standard of living — during periods of economic, monetary or geopolitical crisis. And depending on the nature of the crisis, gold can move from a defensive tool to an offensive profit machine.
There are precious few ways to protect against such actions. But one of those ways is by holding physical gold offshore.
Diversifying internationally sounds complicated, but storing some physical gold outside your home jurisdiction today is not difficult. It’s as easy as opening a bank or brokerage account, especially with today’s best Gold IRA options.
By doing so, you buy yourself some time in a worst-case scenario. Even if you never have to use this “Plan B” money, it’s like an insurance policy against aggressive or unfair political actions.
You could even someday use the proceeds of any sales to invest in other options that may not be available in your home country.
It’s a good idea to keep some of your wealth outside the banking system and also outside your political jurisdiction. Professional vault storage offers you a viable and straightforward way to do just that. It’s not a panacea, but it can put a layer between you and heavy-handed bureaucratic actions.
The catch is, you must put these preparations in place before anything happens. If you want an asset that will rise when most financial assets fall, gold is likely to do that more often than not. The more common stocks you own, the more gold you need.
The best way to invest in physical gold is to store and hold the bullion for its value. That sounds easy, but what should I do about the large amounts of bullion I want to save for my retirement?
Read more about how a Gold IRA can be your best option. Then proceed to see our List of Top 10 Gold IRA Companies and make sure to go with our most recommended company, Regal Assets.
Do you have any questions on the Top 10 Reasons to Invest in Gold and Silver in 2019 for your IRA? Ask below!