Quick Investor Guide to Gold

The Quick Investor Guide to Gold

The concept of protecting your wealth has probably never been more important than it is today. The year 2020 has brought the world one challenge after another from the COVID-19 pandemic, to protests and social unrest, and of course the presidential election in November. Having assets invested in various securities and brokerage accounts is still important, but you should also consider the importance of investing in hard assets as well. Gold is a highly reliable hard asset, and while investing in physical gold isn’t the same as investing in stocks, it’s still very valuable to own for several reasons.

1. Properties of Gold

Gold is a precious metal that has been forged into so many objects over the years, and it’s still used in some coin minting today. It has a limited supply that can be mined from the earth, and when you factor in the difficulty of extracting it plus all of the other aforementioned properties, it makes for a valuable substance. Plus it cannot be subjected to being printed or having interest rates the way fiat currency can, and this can make it attractive to investors wishing to diversify out of the dollar, and avoid the risk of inflation hitting their cash savings.

2. How You Should Invest In Gold

It’s better to invest in physical gold than in gold ETFs because there may come a time when you need to access your gold. But you also need to consider which form of physical gold you want and a few other factors. You need to consider whether you want to store your gold at home, which is usually not a good idea; or if you want it stored in a special depository which is required for gold IRA investing. You can buy gold bullion in either coins or bars, though usually coins are better for storage space, and the IRS usually has special requirements for the kind of bullion you can keep in an IRA.

3. How You Should Open A Gold IRA

Once you’ve decided you’re ready for gold investing and can afford the storage costs, you can begin the process of opening a gold IRA. This is a bit of a complex process, but the gist of it is you will need to open and fund a self-directed IRA first. You can fund it directly from your bank account, or if you have an existing 401k account you want to convert into a gold IRA, you can have your 401k administrator do a rollover into the IRA account. Note that this could be an indirect rollover or a direct rollover, and each has its pros and cons. If you don’t want to worry about delays in funding your account, a direct rollover is usually preferable. Once your account is funded, all gold purchases must be made through that account. You’ll want to become familiar with contribution limits, buying from a reputable gold dealer, and the storage process so that you don’t violate any regulations governing gold IRAs.

4. Why Gold Can Be A Better Investment Than Silver

Silver is another precious metal that rivals gold, and you can invest in it the same way you do with gold. In fact, some experts may recommend buying silver along with gold to add more balance to your portfolio. According to the experts at Goldco, “Precious metals IRAs, and gold IRA investing in particular, is a great option if you’re looking to invest in precious metals. Seen as the most popular of precious metals, gold doesn’t corrode and is malleable and conductive, which makes it highly desirable for many uses.” But while silver has very comparable characteristics to gold, there are also marked differences.

Silver Is More Volatile In The Market

Silver is generally cheaper to buy than gold, and at times sees greater market demand since it’s used to manufacture more industrial products than gold. But these demands can fluctuate wildly over short periods of time and give silver very large price swings. Gold usually gains in value at a much more steady rate, and therefore has a much more stable market. The price can swing with gold, but it almost always normalizes immediately.

Gold Is Easier To Preserve

A downside of silver is it can rust and rapidly lose value if it’s not properly stored. Gold on the other hand doesn’t decay with rust and retains its value much better than silver. There are still some recommendations you should follow for storing it though.

Investing in gold is something you need to do research on to make sure your clear on what you’re getting into. Also note that opening a self-directed IRA for a gold IRA investing can take some time if you’re unsure which financial institution will allow it. But the rewards your portfolio can get from it make it worth getting to know.

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