Lear Capital – Is Gold Investment Worth It?

Gold is a precious metal that has been used for centuries. It is also widely traded and is a good investment because it is tangible and physical possession is vital in a world where government-backed currencies are becoming increasingly worthless.

The supply of this metal is limited, further increasing its value. However, it is not a perfect investment. For instance, it is very volatile; you can lose all or some of your capital. So should you invest in it?

To help you understand whether or not investing in this is best for you, we highlight a few pros and cons below. You can get more background information on this type of investment here.

5 Benefits of Investing in Gold 

It’s a Good Hedge Against Inflation

When the economy slows, several governments often resort to printing money to stimulate their economies. This causes prices to rise, leading to price uncertainties and decreased purchasing power. To ensure the safety of investments, investors move their funds to a stable asset that grows gradually and is not affected by inflation – gold.

The metal has historically proven itself as one of the best forms of wealth preservation in history. It’s also tangible. This makes it vital since most government-backed currencies are losing value.

The supply of gold is limited. So, demand will always outpace supply over time. Since most companies or governments do not use it as currency, it can be an alternative store of value.

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The Value is Constantly Increasing 

Gold is a naturally occurring metal and is not found in every part of the world. The excavation and refining of the metal is very tasking, leading to low production compared to its demand.

Since it’s used for industrial and commercial purposes, its demand is constantly increasing. Therefore, as supply cannot equate to demand, it inflates the value of the metal. You can learn more about the uses of gold here: https://yourstory.com/mystory/9599111633-5-common-uses-of-gold/amp.

It Secures Profit

Even in a bear market, one can make a decent profit from investing in this metal (but it will depend on your strategy).

Gold prices can fall faster in a bear market than stocks, bonds, and other markets. But if you buy when the price is low and sell when it’s high, there’s always plenty of opportunity for profit if you wait long enough.

For example, you could buy 1 gram at $10/gram in January 2000 and resell it for $150/gram six years later; or even more impressively. By the time of sales, your purchase would have increased in value by ten times during that period.

Investing in it Can be Done Without Much Hassles

Investing in this metal is easy because there are several options. You can buy coins, bars, and ETFs (exchange-traded funds) that track the price of bullion. You can also invest in mining stocks—companies that mine for gold or other metals like copper, zinc, and nickel.

Mutual funds are another means of investing in the metal. They hold physical bullion as an asset class on their balance sheets. The best part about investing in these funds is they have higher diversification than traditional index funds. In other words, they include all kinds of assets besides just stocks and bonds; this makes them a more tax-efficient option for investors looking for wealth preservation strategies over time.

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It is Available to More People

Gold is traded worldwide, making it available to more people. It is traded in several currencies, including the U.S dollar, euro, and yen. It can also be easily converted into these currencies if/when needed. This is because of its liquidity and high value per unit gram or ounce.

Its investment has also been attractive because of its high liquidity and low volatility compared with others, such as stocks or bonds (which are more volatile).

4 Disadvantages of Investing in Gold

The metal has many benefits, such as being long-lasting and easy to trade internationally. But there are also some downsides such as their weight and high prices.

It is Expensive

A single gold bar – depending on the weight – can cost between $600 and $2000. An average person might not be able to afford this. ETFs might also be more expensive, as you’ll have to pay management and brokerage fees.

Security

Buying physical bullion or jewelry can make you a target to thieves. This might put you and your family at risk.

Storage Costs

Lear Capital - Is Gold Investment Worth It?
Lear Capital – Is Gold Investment Worth It?

To avoid the risk of being a target, you can store your precious metal at banks or private depositories. However, the cost of using these storage facilities is very high. You might end up spending more than your gold investment on storage payments.

International Markets

Gold prices rise mainly during crises. This is because investors dump other investment forms and run to them for safety, leading to a weak dollar. On the other hand, when the crisis is over, the dollar gains strength and the metal’s price decreases. It has a negative correlation to the dollar and is affected by price changes in the international markets.

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You can visit Lear Capital review to learn more about investing in precious metals.

Conclusion

Gold is a great investment option for those looking to diversify their portfolio and hedge against inflation. However, there are some disadvantages you should consider before investing. So, research properly before making any decisions and ensure you partner with a good company. This will help reduce your risks.

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