It has been a tumultuous year for investors, with Brexit, negative bond yields, a global trade war, an oil price crash, and a worldwide pandemic that is ushered in what is expected to be the worst recession since the Great Depression.
For centuries savvy investors have been aware of the importance of gold as part of a well-balanced and diversified portfolio. Gold is a world-renowned safe haven for investors offering the ultimate insurance and protection against turbulent economic times.
These turbulent economic times are already here with the coronavirus pandemic and its devastating effects on the world’s economy.
It is now time to protect your assets!
By investing in gold, you are not only protecting your portfolio from the volatility of the markets but you are setting it up for significant future growth, as well.
In times of economic uncertainty and instability, buying gold makes more sense than other assets. Gold is no one’s liability and carries no counterparty risk. Gold should be the most essential part of everybody’s investment portfolio since it is financial insurance and serves as a hedge against inflation and currency risk.
“Precious metals should not be seen as an investment, but as financial insurance”, Trevor Gerszt – founder of Goldco Precious Metals.
Historically, gold moves in the opposite direction of traditional securities like stocks, bonds, and mutual funds. When the stock market goes down, the price of gold and silver tends to rise.
Gold has proved to be a successful preserver of wealth throughout times. High gold prices and record demand has ensured it has outperformed most other forms of investments.
Importantly, as a highly precious metal, gold’s worth is recognized internationally and is considered a valuable luxury no matter where you are in the world. Gold investment should be viewed primarily as a low-risk security asset.
If you are looking to minimize risk, diversify your portfolio, and safeguard your wealth during times of heightened volatility, you should turn to precious metals.
The combination of these factors means that adding gold to a portfolio can enhance risk-adjusted returns.
Small gold bars and gold coins accounted for approximately two-thirds of annual investment gold demand and around one-quarter of global gold demand over the past decade. Demand for bars and coins has quadrupled since the early 2000s and the trend covers both the East and the West – World Gold Council.
The coronavirus outbreak was the single biggest factor influencing gold demand. As the scale of the pandemic and its potential economic impact started to emerge, investors sought safe haven assets.
The total demand for gold in Q1 2020 grew marginally by 1% but there was a sharp jump in demand for gold coins, up 36% due to safe haven buying by Western retail investors.
Physical gold is a timeless asset that will always have a value and always lasts the test of time. Holding physical gold bars and/or gold coins provides the ultimate control and insurance for your wealth against financial crisis in an underperforming wider economy.
It is possible for a stock to go to zero, for a bond to default, for a currency to lose its value, but gold will never be worth zero.
These indirect forms of investing in gold are much riskier than physical metal. Physical gold offers you that layer of protection and security which Gold Exchange Traded Funds (ETFs) do not. A Gold ETF is an exchange-traded fund with gold being the principle and the only commodity being traded.
Similar to the banking crisis, ETF companies are vulnerable, unpredictable, and controlled outside your hands, so investing in an ETF that owns gold stocks is a higher-risk way to play. The management fees on your holdings will add up, and in practice, this can have much the same effect as inflation.
If you do not want to purchase physical gold, you can always look to gold mining stocks. Keep in mind that gold stocks do not necessarily move in concert with bullion prices because mining companies succeed or fail based on their individual operating performance and how they deploy their capital and generate profits.
If you like the profit potential of gold mining stocks, but do not want to buy individual companies, you can invest in gold funds instead.
Be aware, however, that gold stocks rise and fall faster than the price of gold itself. You do not have the security of physical possession of the metal if the companies you buy are unsuccessful. With physical gold bullion, this would not affect you directly as you are not relying on any third party individual or company to look after your wealth for you. You are in control of your own wealth.
It goes without saying:
Whether to invest in gold coins or gold bars depends on your individual investment goals and situation. Gold bars are the largest and most efficient way to purchase and store large amounts of gold. They are usually also the most cost-efficient because they have the smallest premium over the gold spot price and the lowest markups for design and transportation. They are also easier to stack and more difficult to counterfeit.
Gold coins are smaller and more convenient than gold bars but they are also harder to store because they are easier to lose. Gold coins are less efficient than bars for holding large amounts of metal and some of them may come with a higher premium over spot since they can be marked-up for design or rarity.
However, gold coins are more useful for people who intend to use their gold as money.
For maximum liquidity, most investors stick with the most widely circulated gold coins, including the South African Krugerrand, the American Eagle, and the Canadian Maple Leaf.
You can view the full range of gold coins here.
Prudent gold investors ensure that they pay the lowest costs to purchase the gold and are able to sell it quickly and easily for full value as circumstances change. There will always be bullion dealers who are willing to buy your gold instantly over the telephone. Investors can realize the value of the gold in just a few minutes and get a bank transfer or instant cash payment onsite the very same day.
|Regal Assets, for example, will buy back your precious metals any business day of the week and have funds in your possession within 24 hours of a sale.|
Portfolio allocation analysis (based on the seminal work of Richard and Robert Michaud) indicates that investors who hold between 2% to 10% of their portfolio in gold can significantly improve performance.
We cannot state enough how important it is to choose a reputable gold dealer. It can make all the difference, both when it comes to credibility and reassurance, and also when assessing the vital elements that can affect your investment return such as coin selection and tax-efficiency.
It is of paramount importance to do proper due diligence before transferring your hard-earned money from your bank account. It is important to remember that even one bad transaction can cost you a lot of money as gold is an expensive purchase.
A reputable gold dealer will be able to help both experienced investors, looking for diversification, as well as those looking to own gold for the first time. Your dealer should be able to offer options such as tax-free gold, pension gold (Gold IRA), a buy-back program, etc.
Step 1. Research The Internet
The Internet is the best place to conduct your research. The Internet holds information about the impartial experiences, opinions, and recommendations of millions of people all around the world. Simply use the Google giant and type in the company or brand name and see what comes up.
Step 2. Research Customer Reviews
The Internet really is the world’s largest open forum in which companies have no control. It will quickly become apparent if a bullion dealer has a negative online reputation, in which case they should be avoided at all costs.
The best way is to research what other customers are sharing about their experience with the dealer on independent third party review sites like TrustLink or TrustPilot. An effective way to identify credible reviews is to type the bullion dealer’s brand name into Google followed by the word ‘reviews’. For example, ‘Goldco reviews or Regal Assets reviews’. Anything below 4.7 out of 5 would require some serious further investigation.
Step 3. Trust Your Gut Feeling
After speaking to a gold dealer, you should feel certain they have your best interest in mind. Be alarmed if they recommend investing all your assets into precious metals. The whole idea is to diversify your assets. Your gold dealer should consider your long-term investing goals and recommend the best solution for you.
There are three primary choices:
1. Take Physical Possession
This is where you take personal custody of the bullion. You will need to store it in a safe place, somewhere it is unlikely to be destroyed by fire or some other disaster. Be sure to insure your gold. You can do this easily with your homeowner’s insurance policy to provide coverage in the event of loss.
2. Storage With The Gold Dealer
3. Gold IRA Accounts
Certain self-directed IRAs will allow you to hold bullion in your retirement account. Setting up a Gold IRA is a specialized process and you will need to find an IRA custodian specializing in the practice. We highly recommend starting your Gold IRA with Goldco or Regal Assets. They both have IRA Experts that make the transfer or rollover process quick and easy.
» Goldco specializes in Gold & Precious Metals IRAs.
» Regal Assets specializes in Alternative Assets IRAs, where you can add cryptocurrencies to your portfolio, as well as precious metals.
While everyone is familiar with gold and silver, they often overlook the other precious metals, those in the platinum group: ruthenium, rhodium, palladium, osmium, iridium, and platinum.
So what is the best metal to invest in right now?
There is a reason people refer to certain benchmarks as a “gold standard” – because gold is the object against which every other good has always been valued. Gold’s ability to maintain its value over time is legendary. Just look at the difference between a $20 gold piece and its contemporary $20 bill. That $20 bill is still worth $20, while the $20 gold piece will net you over 80 times that much.
More so, gold is not just a source of stability or diversification for an investment portfolio. It is also a source of potential wealth appreciation. In the aftermath of the 2008 financial crisis, the price of gold nearly tripled in value.
Those who want to protect their tax-advantaged retirement accounts can even take advantage of a 401(k) to gold IRA rollover to invest in gold. A gold IRA allows owners of tax-advantaged retirement accounts such as a 401(k), 403(b), TSP, IRA, or similar account to roll over those funds into an IRA that invests in precious metals such as gold. The gold IRA offers the same tax advantages as any conventional IRA but with the added protection that an investment in physical gold coins or bars can offer.
All that glitters is not gold, as silver investors know well. While silver often plays second fiddle to gold, it is an important metal in any investor’s portfolio. During precious metal bull markets, silver’s gains can often outstrip those of gold. After the 2008 crisis silver quadrupled in price while gold only tripled.
The silver price and market are different than that of gold because silver is much more heavily used in industry than gold. Roughly half of all demand for silver comes from industry, whether it is from electronics, dental equipment, or increasingly the solar panel industry. The industrial demand for silver is forecasted to increase.
Read more about the benefits of silver in:
Like gold, silver can be invested in through an IRA. A silver IRA allows investors to hold silver in an IRA and enjoy all the same benefits of a tax-advantaged retirement account, while simultaneously investing in physical silver coins or bars.
Platinum is the third-most-popular precious metal among investors today. Platinum’s history is not as long as that of gold even that the metal has existed for millennia.
Roughly half of platinum produced today is used in automotive catalytic converters, its primary industrial use. A large portion of platinum is used in jewelry. The remainder is used for electronics and in various other industries that need platinum’s resistance to corrosion.
The platinum price has been more volatile than gold recently, largely due to falling industrial demand from the automotive industry. Over 80% of today’s platinum production comes from South Africa which may lead to fears of supply disruption.
However, that also means that in the event of a disruption, the platinum price should rise significantly.
It is hard to imagine platinum becoming any cheaper than it already is. Years from now investors may look back and kick themselves for not investing in platinum when they had the chance.
Only discovered in the early 19th century, and once of limited use primarily in jewelry, palladium has rocketed in price in recent years. Like its sister, platinum, palladium finds one of its primary uses in the automotive industry in catalytic converters.
Recent supply disruptions have caused the palladium price to skyrocket, reaching over $2,500 at one point in early 2020. Even though the price has fallen back below $2,000, palladium is still more valuable than gold, at least for now.
Investing in gold is useful because precious metals are a separate asset class from stocks and bonds, and are partially uncorrelated and have their own unique risks and opportunities.
Gold should be the most essential part of everybody’s investment portfolio since it is financial insurance and serves as a hedge against inflation and currency risk.
Just a small allocation of precious metals–5% to 10%–could add a significant amount of protection to your portfolio if things get ugly in the financial markets.
|Disclaimer: The owner of this website is not licensed as an investment advisor and, accordingly, does not make any recommendations regarding clients’ personal investment portfolios. It is recommended that you carefully evaluate and research the risks and rewards associated with investing in alternative assets such as physical precious metals and cryptocurrencies before you make a purchase.|
About The Author
Stina Pettersson is an aspiring entrepreneur who is working on achieving her goals as an Internet Marketer.
Stina was tired of her corporate job as a Marketing Specialist and wanted to stand on her own two feet.
Stina is originally from Sweden but has resided in the U.S. for the past seven years.
“My main goal is to maintain a flexible lifestyle, where I set my own schedule. Even that I work hard, I love what I do every day, and I also have the opportunity to help other people which is a huge gift.”
|Disclosure: The owner of this website may be paid to recommend Regal Assets, Goldco, or other companies. The content on this website, including any positive reviews of Regal Assets, Goldco, and other reviews, may not be neutral or independent.|
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