Affiliate Disclosure: The owners of this website may be paid to recommend the following companies: Goldco, Augusta Precious Metals, Noble Gold Investments, and Birch Gold. The content on this website, including any positive reviews of the mentioned companies, and other reviews, may not be neutral or independent.
Before you decide whether or not to invest in gold, it’s important to know both the pros and cons of gold investing. Gold has many uses in jewelry, electronics, and medicine, but the main reason that investors choose to purchase gold is that they think it will appreciate and grow in value over time. While there are certainly benefits to investing in gold, there are also risks involved. Take a look at both sides of the coin before making your final decision on whether or not you should buy gold.
Table of Contents
5 Things to Consider Before Buying Gold: Pros and Cons of Gold Investing
- What is your budget? Whether or not you should invest in gold depends on what you can afford to spend, and how much risk you are willing to take.
- How diversified is your portfolio? A well-diversified portfolio should include a mix of stocks, bonds, cash, real estate and commodities that might include metals like gold.
- How liquid are the investments in your portfolio? Liquidity measures how easily you can buy or sell an investment when needed for some purpose (such as paying for tuition).
- What is the inflation outlook for the economy over the next 5 years?
- How much time do you have to invest for returns? If you have a short time horizon, such as five years or less, it’s probably best to keep your money in cash and bonds because they are more liquid and safer investments. If you have a longer investment timeframe, say 10 or 20 years, you may want to put some of your money into riskier assets like stocks and gold that might give you a higher return. While inflation is predicted over that span of time, if it turns out worse than expected, gold will provide protection from rising prices (which would be bad for stocks).
Pros and Cons of Gold Investing
Top Gold IRA Companies
Our recommended Providers are researched and vetted by us and many top consumer organizations. This is the short list of the most consistent companies we could come up with. Request information from them below.
#1: Augusta Precious Metals
Our Rating: 10/10
Pros
✅ ZERO complaints with the BBB and BCA
✅ Highest reputation and customer satisfaction in the industry
✅ Non-commissioned sales team
✅ Transparent pricing with up to 10 years of fees waved – with qualifying purchase.
✅ Hall of fame quarterback, Joe Montana was an actual customer before becoming their spokesperson!
Cons
❌ No way to setup online
❌ The minimum purchase for IRA/cash purchase is $50,000
Get a free gold IRA Kit now!
Call: 1-855-470-4636
#2: Birch Gold Group
Our Rating: 9.9/10
Pros
✅ Great company commitment to education and communication
✅ Impeccable customer service
✅ Silver, gold, platinum and palladium available
Cons
❌ Signup process can only be done thought a specific link
❌ Certain fees are not disclosed up front
❌ No buyback guarantee of precious metals
#3: Noble Gold Investments
Our Rating: 9.6/10
Pros
✅ One of the best no questions asked buyback programs in the industry
✅ Free delivery of your precious metals to your door at any time
✅ Over 20 years of experience in the precious metals industry
✅ Gold, silver, platinum, and palladium available
✅ One of the lowest barriers to entry – ideal for smaller investors
Cons
❌ High annual fees for low balances
Pros and Cons of Gold Investing
However, it’s also important to consider that some investments are purer than others when it comes to gold. The closer an investment is to owning physical gold, such as gold coins or bullion, the more pure (and volatile) of an investment it is. If you’re looking for a pure investment that does not fluctuate much with other financial instruments and has little correlation with any one asset class, investing in true physical gold may be a good choice for you. Whether or not you should invest in gold depends on what you can afford to spend, and how much risk you are willing to take.
Will the Dollar Crash?
No one knows exactly when the dollar will crash, but we know it will happen at some point. If this is something you’re concerned about, read on to learn more about investing in gold and whether it’s a good choice for you. There are many reasons people invest in gold as a hedge against inflation or the collapse of fiat currencies, but there are also many downsides: high price fluctuations, lack of liquidity, unfavorable tax treatment if owned as an investment rather than jewelry and much more. To be clear: while we believe that investing in gold has benefits and disadvantages to any investor looking to diversify their portfolio- it is not an automatic safety net should the dollar ultimately collapse. So should you invest your money into gold?
If you’re looking for a place to park your money that’s outside of your traditional investment portfolio, gold may be a good option. Just make sure to diversify and understand what you are getting into before you make any major financial decisions. Always consult with an expert and plan carefully before making any investments- no matter what asset class is involved. The market fluctuates, so if you are not prepared to lose your initial investment amount, don’t even think about getting into gold. And always remember: The best way to protect yourself from a plummeting dollar is by saving as much cash as possible- maybe even buying US Treasury Bonds (although they don’t offer protection from everything).
Pros and Cons of Gold Investing
Where Will the Next Bull Run Take Place?
Recently, there has been a significant number of individuals moving out of bitcoin and into gold. Where will the next bull run take place? I asked five different people this question and got five different answers. Some believe the next bull run will happen in gold, others believe it will be in a yet-to-be-discovered cryptocurrency or some as yet unknown asset class. I found all of their responses compelling, but am more inclined to think that the next big run is waiting for us just over the horizon.
As I previously mentioned, there are a number of factors that contribute to an asset’s price movement. For example, let’s take a look at what happened when gold experienced its last major bull run from January 2001 through September 2011. During that period, gold rose from $272 per ounce to $1,895 per ounce (that’s for you investors out there looking for some perspective). The primary drivers of that bull run were: Inflation, increased demand from China and India (thanks to their growing economies), an expanding Federal Reserve balance sheet coupled with strong U.S. dollar sentiment. A few months ago, we saw inflation creep up again (prices rose 2% year-over-year) while the Fed Balance Sheet was cut by another 75 billion dollars after having grown by nearly 500 billion dollars during 2017; meanwhile, the dollar weakened. These factors should put upward pressure on prices in 2018/2019 – leading to another bull run. And even if gold doesn’t see another huge rally, its real return potential remains attractive given how many fiat currencies around the world have fallen against it since 2000. These are some of the pros and cons of gold investing.
Pros and Cons of Gold Investing
What Countries Are Less Debt-Ridden than the US?
Canada, Chile, Brazil, and Poland are all countries that have lower public debt than the United States. The Netherlands has lower private debt, while Switzerland has the lowest total public and private debt of any country in the world.
Overall, public debt isn’t a problem unique to countries such as America. However, other countries have bigger issues they need to address before they start worrying about their own debt levels. For example, Greece currently has debt levels of over 180% of GDP and has a government borrowing requirement of 15% more than its income. This would make it impossible for most countries in a high-debt situation to ever pay back their loans unless their economies improve considerably.
Some Countries are More in Debt than the US!
In countries like Italy, France, and Japan, government debt is even higher than America’s at 115%, 96%, and 245% of GDP respectively. This makes them extremely vulnerable to any significant change in interest rates or economic conditions that would increase their borrowing requirements. Given that these changes are likely over coming years due to an aging population, changing attitudes toward spending on social welfare programs, or a rise in global inflationary pressures – it may be time for countries such as these to look at ways of lowering their debt levels before it becomes a real problem.
Does Gold Have any Drawbacks?
Despite all of its advantages (you can find out about some of them here), gold does have certain drawbacks.
The biggest drawback is that it doesn’t pay a return. If you buy gold bullion and leave it stored at home, you aren’t getting any interest or income from it. If you sell bullion, most buyers will pay you using cash. Given that many governments are so keen to reduce their debt levels, it may be harder to find someone who is willing to exchange gold for cash if everyone else is trying to do so too.
Pros and Cons of Gold Investing
In addition, storing gold is more expensive than it may seem. If you’re holding bullion yourself then you need to pay for it to be insured and stored safely. This means that unless you plan on using your gold to buy things like a house or car, then investing in gold might not be as cost-effective as you think. If a lot of people end up trying to sell their bullion at once, prices will fall and so could profits – leaving your initial investment worth less than what you paid for it.
Is a Recession Imminent?
Pros and Cons of Gold Investing
No one knows what the future holds, but a recession will always be a risk. To help reduce that risk and boost your portfolio at the same time, here are some of the benefits of investing in gold: * Stability – Historically, there has been low correlation between gold prices and market swings because it doesn’t correlate with currencies or commodities * Security – Gold offers an added layer of protection from volatility and inflation (or deflation) as it is immune to most world economies * Liquidity – It can be easier to buy and sell bullion coins or ingots than stocks, options, or mutual funds. All you need is money to buy some metal and space for storage. There are also options like ETFs for those that want more flexibility
What could go wrong with gold? * Supply – The demand for gold is rising from both industrial and investment uses, which means that supply may not keep up with demand. That’s led to high volatility in prices as it becomes harder to find and mine gold. * Demand – Demand for gold has been rising over time, but it is notoriously volatile due to cultural trends and central bank activity. * Low returns – The price of gold goes up only because people are willing to pay more for it at a given time, so you need a higher price if you want positive returns on your investment (and don’t expect dividends). Instead of buying actual physical bullion—which can be difficult—you can buy exchange-traded funds (ETFs) or stocks instead.
Pros and Cons of Gold Investing: How Much Risk are You Ready for?
The answer to this question depends on the degree of risk you are ready for. In the short term, stocks are more volatile than gold, but stocks tend to grow at a faster rate over a longer period of time. Depending on what your priorities are it might be best to invest different amounts of money in stocks and gold. For example, if you have shorter time-frame investments that can withstand some volatility but you want your portfolio to grow over a long period of time then it may be best to invest primarily in stocks; whereas if you’re trying to preserve assets or need liquidity right away then it may be better to invest primarily in gold.
Another thing to consider is your risk tolerance. Your ability to accept risk should also influence how much you invest in stocks and gold. As previously mentioned, stocks tend to grow faster than gold over a long period of time but there are fluctuations that can result in losses that you may be unable to tolerate. If losing some money is too upsetting for you then it might be best not to invest any of your portfolios into stocks at all, instead putting everything into gold.
Pros and Cons of Gold Investing: Is There A Cheaper Alternative To Gold Such As Silver Or Palladium?
Silver and palladium are alternatives to gold. Like gold, they are considered a currency, however unlike gold the fiat value of both silver and palladium is much lower. The main pros of investing in silver or palladium over gold are:
- They have lower volatility;
- It’s easier to get access to physical silver or palladium; and
- There is more diversity when buying physical goods with them. Another pro of silver and palladium is that their costs tend to be much lower than gold’s because both metals aren’t as rare as gold. A potential downside of these two metals is that it may be more difficult for buyers to differentiate between certain qualities.
What about investing in cryptocurrency like Bitcoin? Cryptocurrencies are a viable alternative to investing in gold. Many of them have been rising and falling rapidly, but some experts predict that it will stabilize and become a commonly used payment method for everyday things such as your coffee. However, many people are concerned about cryptocurrencies being used for illegal or fraudulent activities because there is little regulation or security with these digital coins. This concern is another factor weighing against using cryptocurrencies instead of gold. In addition, since these digital currencies are subject to hacking and fraud, it’s difficult to get physical access to them.
Buyer Beware! Gold IRAs are Unregulated!
Gold is often associated with wealth and has historically been a good investment during times of economic distress. As of now, it has experienced volatility that other investments have not, so it’s hard to know for sure whether it will be a wise choice or not.
But how much should you invest in gold? The answer is: it depends. I typically recommend that people set up a small percentage of their portfolio as a savings account of sorts, where they can tuck away some extra cash to buy gold when the market dips–essentially, this helps protect your portfolio if the world economy changes. On the other hand, some people prefer to take on more risk and are comfortable owning 100% or more of their portfolios in stocks–a riskier bet but one with higher reward potential.
The downside to investing in gold is that it’s a finite resource, meaning there are only so many ways to mine for it. But what we do know is that supply of gold isn’t increasing and the demand keeps going up because the world’s population is rapidly expanding. The demand for gold has grown so much that if you had invested $1,000 dollars in gold back when President John F. Kennedy first came into office then you would now have $87,403 dollars worth of gold!
There are a few advantages to investing in gold. Firstly, the inherent price stability of gold means it doesn’t experience the same highs and lows as more volatile investments. There is always demand for it from both individuals and governments as well. Unlike fiat currency that often experiences inflation, gold does not lose its value over time. Finally, gold has many practical uses, such as jewelry or electronic circuitry for creating computers.
If you are considering investing in gold, you may want to ask yourself a few questions first. The answer to these questions can help you decide if it is right for you. If so, great! If not, there are many other options out there that might be more fitting.
Though gold can provide some safety, the potential return on investment (ROI) is quite low. Experts predict that while the value of gold will continue to increase with inflation and cost of living, it will likely not be an over-night cash cow. To make significant money with an investment in gold requires high costs for storing the metal and this might not be worth it for most people as a means of long-term investing.
Gold has been the best performing asset since the U.S. dollar’s collapse in 2014 and is considered by many to be a hedge against inflation, which is predicted to continue rising. However, there are many downsides to investing in gold: it offers no income stream, has high transaction costs when converting from one currency to another and does not offer any diversification benefits. Additionally, prices for gold fluctuate daily based on market forces like inflation rates, interest rates and economic uncertainty–a major downside of investing for short-term gains. The most recent global recession also caused significant drops in the price of gold. For these reasons and more, gold should not be your only investment option.
A crash in the stock market is often a cause for concern. But if you’ve got gold, your worries might be a little less intense. When stocks fall, some people see buying gold as a safe haven, an asset that would maintain its value in such situations. A decrease in the value of stocks is bad news for the owners of these shares; this has prompted investors to seek out alternative investments like gold and other precious metals, which tend to hold their value better than other investment instruments like stocks or bonds. The ultimate lesson? Gold may not be totally invulnerable from economic turmoil but it certainly seems safer than stocks and bonds. For anyone looking to hedge against financial disaster, it’s worth considering what appears to be one of the best forms of protection on the market today.
Pingback: Can You Put Gold in an IRA? - Gold IRA Rollover
Pingback: Investing in Gold IRA Funds - Gold IRA Rollover
Pingback: 401k to Physical Gold - Gold IRA Rollover
Pingback: Can You Really Protect Your Retirement by Transferring Your 401k to Gold? - Gold IRA Rollover