If you are looking to expand your investing portfolio, you may have already heard about gold investing. Perhaps you have learned about it in a more general sense – precious metals have been a sort of buzz word in the investment world for many years now. However, now more than ever it is making a big name for itself.
That is why I think right now is such a good time to learn about it. There are plenty of opportunities available if you know where to look! If you are unfamiliar with how gold investing works and want to learn more, I will be covering it in this article today, so continue reading!
Table of Contents
What is Gold, and Why is it Valuable?
I am starting here, as I think this is the point that the rest of this article will hinge upon. Why would anyone want to invest in something that does not have value, right? Well, gold is a precious metal on the periodic table. It is a naturally occurring element, and we have been mining it for centuries.
It is a surprisingly malleable substance, and it is highly conductive as well, making it useful for all sorts of things. For example, many electronic devices such as cell phones use small strips of gold inside of them! So, that is part of why it is so valuable. However, there is more to it than that.
Part of the reason it retains its value is the ties it has to our historical currency. Many coins have been made of it, and several still are. Some examples of that are the Canadian Maple Leaf, the Australian Kangaroo, and the American Golden Eagle. You can learn more about why this is important on this page: https://www.forbes.com/advisor/investing/how-to-invest-in-gold/.
While it is true that paper money is no longer directly related to the corresponding value in gold, that has not really depleted the value of the commodity itself. You see, there is still a large market for it, especially if you turn your attention globally.
The Global Market
Before I look at other countries, I will note that the United States has a thriving market for gold. The demand here is quite large for many reasons, particularly jewelry. Think about engagement rings, for example – many have gold bands. This is the driving force behind its popularity in this country.
Now, looking abroad, I will highlight a few other places. Turkey is one that people rarely think about, but I think it is an excellent example of just how ingrained these precious metals can become in cultures. While many people have a misconception that it is not important in modern societies, Turkey is a demonstration to the contrary.
Turning our attention to China, this is another country in which the demand for gold is quite high. Part of this is due to traditions such as gifting pieces of gold jewelry such as small bracelets to young children and babies for good luck. However, besides that, it is also quite popular during the Chinese New Year. Many intricate pieces are produced with symbols of the zodiac!
Finally, one more place where the gold industry is really booming is India. It is a status symbol of wealth there (as it is in most places), but it is also very commonly used in bridal adornments. It is also seen as a solid and practical form of investment because it is portable (at least in some forms).
How Does Investing Work, then?
Now that I have discussed with you why it is valuable and what it is, you are probably wondering how you can start to invest in it. Well, you could look at places such as Goldco’s website for some examples of how to begin. Finding somewhere that offers professional advice is usually a good way to get yourself started, particularly if you are new to investing.
Now, there are many different forms of gold that we can purchase to invest in, but only some are accepted into tax-benefitted retirement accounts such as IRAs (individual retirement arrangements), so keep that in mind. Some that fall into that category of not being accepted are certain types of coins and collectibles like necklaces or rings.
However, there are many that are eligible to be placed into these accounts. For example, gold bars (also known as bullion) are one thing that can be placed into a retirement account or simply be utilized as a holding that slowly garners value over time. Usually it requires special storage, though, so that is something to keep in mind. The groups that handle that are often called custodians.
Stocks are another option, specifically if they are for a company involved in mining, refining, or otherwise working with this precious metal. There are of course positive and negatives to this plan. On one hand, it does provide you with potential exposure to other types of commodities and gives you the chance to earn dividend income, but on the other, there is also the chance that your stocks will underperform compared to the price of gold.
There are also gold certificates and EFTs. If you are not familiar, an EFT is an exchange-traded fund. Both of these are fairly liquid forms of investing and also offer you a close and personal look at prices of gold on the market. However, something to remember is that these are typically only as good as the company that issues them, so it is still best to be cautious.
Is Gold Investing Worth it?
While this question is a bit more complex than a simple yes or no, I would conclude that in general it tends to be worthwhile. If you are not immediately convinced, you may not want to stake your whole retirement on this. However, it is still probably worth at least talking to a professional about it, in particular a financial advisor. Hopefully, they will be able to steer you in the right direction!