No commodity in the world has the lasting value of gold across the known empires of history – and with an increasingly volatile economic market demonstrating the limitations of fiat currencies, it’s no wonder that more and more people are looking into the merit of investing in gold.
Whether you’re a beginning investor who is just starting to grow their portfolio (check out our guide to investing in gold first if so) or are someone who’s accustomed to dealing in high value trades, gold has earned its reputation as a hedge against investment. In this guide, we’ll go over gold’s value as an investment in the current market climate, and provide detailed information on how to invest in gold from multiple approaches.
Table of Contents
- Why Invest in Gold?
- What Are the Top Gold Investment Strategies?
- Where Can You Buy Physical Gold?
- How Do You Store Physical Gold?
- How Do You Sell Physical Gold?
- Key Takeaways: Investing in Gold
Why Invest in Gold?
If you’ve ever asked yourself “Is gold a good investment?”, this is the time to answer that question. Recession fears are welling up in the U.S. and around the world as inflation rolls in waves across global economies. Because of its inverse relationship with the stock market, Investing in gold means that when fiat-based bonds go down in value, your gold investments will go up. In other words, every day that goes by that sees the dollar decrease in its worth is one that more people turn to gold as a safe haven. Let’s get into it.
Diversification of Your Portfolio
As any financial advisor will tell you, diversification is the key to a well-built investment portfolio. If you put all your eggs in one basket, then you run a very high risk of losing everything if the investment goes bad.
But true diversification means spreading your investments into different types of markets. A gold investment, or similar investment in precious metals, can give your portfolio the diversification it needs to protect your savings against the volatility of other markets as the value of currency dips and fluctuates.
Preservation of Wealth
To plan a truly carefree retirement – without worry of debt or working for the rest of your life – then you need a plan to preserve (and grow) your wealth. Ideally, you want to be able to live tomorrow as you do today – or potentially even better.
For decades, gold investment strategies have been used by investors of all ages and experience to protect their savings and plan for a better future. Gold and other precious metals are stable, liquid assets that have continued to increase in value over the years, and have helped millions reach their long-term financial goals.
Hedge Against Inflation
As a finite resource, gold is an excellent commodity for hedging against inflation. The important thing to remember when making a gold investment is that you are not just protecting your worth with the increasing value of gold alone. You are also protecting against the declining value of the dollar.
The value of the dollar has declined considerably over the last decade. Even if your investments were not affected by a declining economy, you still lost purchasing power as the dollar declined. Precious metals, however, tend to hold value above inflation and even increase as the dollar declines.
Planning for Your Future
A lot of uncertainty still surrounds the global economy, which can influence investment values as well as the value of the U.S. dollar. Some have even speculated that the U.S. dollar may collapse completely, which would have drastic effects on every American.
No matter what your age or current investment strategy, there is no better time to start preparing for your future than right now. Investing in precious metals can protect your hard-earned money and allow you to preserve your worth and lifestyle into retirement.
What Are the Top Gold Investment Strategies?
If you’re ready to ask how to invest in gold, there are fortunately multiple pathways that you can choose from based on the amount you’d like to invest and your overall investment experience. Read on to learn about the top methods of investing in gold, starting with the most popular – precious metals IRAs and gold bullion – followed by a look at the collector’s treasure: numismatic coins.
Precious Metals IRAs
Precious metals IRAs are gold investments that enable you to enjoy all the tax benefits of a retirement account – without the anxiety associated with volatile investments. A gold-backed IRA helps you safeguard your retirement funds, and you can rollover all or a portion of your 401(k) and IRA accounts into physical gold possession. Read more in our guide on how to buy gold with a 401(k) if you’d like to dive in and get started.
Unlike physically collecting gold bullion (which we’ll cover next), precious metals IRAs enable you to own gold without having to provide physical storage, security, and insurance for the gold. As such, you can benefit from the gold market without taking on additional hassle and risks.
The biggest downside to owning gold through a precious metals IRA is the same as its biggest upside – you don’t physically possess it in the sense that you can go out to your vault and count the bars. For some gold investors, that’s a deal breaker, but for others, not having to handle the gold directly is a win all around.
Keep in mind that IRAs are “Individual Retirement Accounts”, meaning they’re intended to be tapped into when you retire. The same is true for precious metals IRAs – don’t expect to access the potential profits from them in the short term or you could be looking at early withdrawal fees.
Investing in gold via a precious metals IRA is as simple as opening a self-directed IRA through a custodian of your choice (read more on where to invest in gold for tips in this department). Once opened, select a reputable gold dealer, and direct the custodian to make purchases either on a one-time or recurring basis.
Gold Bullion Bars & Coins
Gold bullion bars and coins represent the literal, physical form of gold – and, while they come with the additional hassle of creating and maintaining storage for them, they comprise two-thirds of the global demand for gold. If you opt into this gold investment strategy, you certainly won’t be alone!
It’s easy to get started with buying physical gold bars and rounds, as your first step is simply to see what you can afford and how convenient you’d like your gold to be. At the upper end, a full gold bullion bar has a significant amount of value to it, but it’s not easy to haul it out and pay for commonplace items with it. Alternatively, investing in gold coins such as the American Gold Eagle or the Krugerrand will provide you with physical gold that is much easier to transport and much easier to liquidate when the time comes.
There are challenges to purchasing and keeping physical gold that all potential investors should be aware of before diving into the bullion market. Read below for some tips on how to both buy gold bullion and store it safely. Investing in counterfeit gold or having your stash stolen outright are two outcomes that everyone wants to avoid!
Minted prior to 1933, numismatic coins are not valued only based on their precious metals content – as are bullion coins and bars – but also based on their condition and scarcity. Collectors vie for these increasingly rare coins at dealers and auctions, with some coins selling in the millions depending on their rarity.
Because of the extra historical value they carry, numismatic coins can carry additional sentiment for owners and prospective buyers. Morgan Dollars, Peace Dollars, and Saint-Gaudens Double Eagles fetch top dollar when they are kept in mint or near mint condition.
The requirement of keeping the coins intact means that if you choose this gold investment strategy, you should expect to have an adequate and secure storage space (with climate controlled conditions). Be sure to insure your collection to protect it against degradation or theft.
It’s also worth bearing in mind that numismatic coins are illiquid options. If you suddenly need funds quickly, your options for converting numismatic coins into spendable currency at their full value are virtually nonexistent. Pawn shops will take your coins, but it won’t be for what they’re worth. If that’s not a concern for your situation, however, numismatic coin investing can be a satisfying pursuit.
Where Can You Buy Physical Gold?
For beginners looking at how to buy gold, buying physical gold is by far the easiest method. With that said, just because it’s easy to buy gold coins at the pawn shop, through eBay, or from a neighbor, that doesn’t mean it’s a good idea to do so. Counterfeit and low quality gold coins won’t fetch any real value, meaning that if you’re going to invest in gold bullion you should do it the right way: through a mint or reputable dealer.
Government and private mints are licensed to produce gold bullion. When you buy from them directly, you’re ensuring the authenticity and purity of your gold.
Alternatively, reputable precious metals dealers such as Birch Gold provide a similar level of reliability to their customers, many of whom return as they continue to add to their stockpiles. As a premier gold dealer, Birch Gold is also able to supply precious metals IRAs with easy access to gold to help retirement accounts diversify and grow.
How Do You Store Physical Gold?
When it comes to storing physical gold, you have two primary options to consider: Do you want to store it yourself, or do you want someone else to handle the storage for you?
If you’d like to store it yourself, a dedicated room, vault, or safe is your best bet. Ideally, you will want to be able to control the humidity and temperature in the room or container. Gold is classically resistant to corrosion, but you won’t want to leave anything to chance if your future funds are at stake (and any speck of other metal may corrode). Keeping the area as secure as possible is also key – meaning that you should refrain from talking about your physical gold stash to anyone you don’t fully trust.
If you would like someone else to handle the acquisition and storage of the gold for you, enlist the custodian of your precious metals IRA to utilize their precious metals IRA storage options. Custodians of these accounts are well experienced with providing storage areas that meet all qualifications for preserving the value of gold, along with full insurance in the extremely unlikely event of theft from such facilities.
How Do You Sell Physical Gold?
After you’ve acquired your gold, whether in your own accessible storage or via a precious metals IRA, the time will eventually come that you’ll want to sell it.
If you’re selling your gold through a precious metals IRA, the process is incredibly easy. Simply contact a precious metals dealer such as Birch Gold once you’ve determined how much you’d like to liquidate, and let the transaction take place. You can liquidate your gold assets at any point in a precious metals IRA without penalty – as long as you aren’t withdrawing cash directly from the IRA itself. If you make a cash withdrawal, you’ll pay a 10% penalty fee if you’re under 59 ½, and you’ll need to pay taxes on the amount withdrawn.
Selling physical gold doesn’t come with an upfront fee, per se, but it does have its costs. If you want to liquidate your gold bullion, expect to pay shipping costs to send it to the dealer, as well as paying for insurance on the package in the event it gets lost or stolen. Lastly, dealers may change a flat or percentage-based fee for liquidating. Be sure to find out in advance before moving forward with any particular dealer.
Key Takeaways: Investing in Gold
There’s a reason that having a gold investment strategy is considered to be a solid hedge against inflation – and that reason is diversification. More than anything else, investors who want to ensure that they will have access to funds in the future need to consider the importance of investing into commodities with lasting value outside the dollar. As a prized, finite resource, gold is the runaway favorite for precious metals investors around the world.
- Choose gold to diversify your investments, whether by buying it in bullion form, creating a precious metals IRA, or collecting numismatic coins.
- Buying and storing bullion gold yourself provides you with immediate access to your investment, although its liquidity will depend on the form of gold you choose (with coins such as the American Gold Eagle being the most liquid).
- Precious metals IRAs can buy and store bullion gold for you, handling concerns about security, storage, and insurance all at once.
- Numismatic coins enjoy a specialized market that can lead to staggeringly high prices, but they can be difficult to liquidate quickly.
- When it comes to buying and selling physical gold bullion on hand or in your precious metals IRA, choose a reputable dealer like Birch Gold to avoid counterfeiting concerns.
If you are ready to diversify your savings and have financial peace of mind, call Birch Gold Group today at (800) 355-2116.