If you ask ten people is buying gold bullion a good investment? you’ll get eleven answers. Some people swear by it and hide ingots under their pillows. Some people say it’s out of style. So what’s the news?
First of all, gold has a long history. People have turned to it for hundreds of years when things go wrong, including wars, excessive inflation, and currencies that drop like lead balloons. Money can go down, but that shiny bar stays strong. If you need to, you can quickly move a gold coin across borders or swap it for things you need.
But don’t allow your memories get in the way. Gold doesn’t pay dividends. No payments every three months. No magical growth. You buy it, put it away, and hope the price goes up. Some people think this is a bad thing compared to stocks, which can pay you dividends if you pick the right ones. But gold’s lack of yield gives you peace of mind; it’s like a life jacket in a rough market sea.
When it comes to price, gold likes to do its own thing. If you watch it during financial antics, you’ll notice the price go up a lot. People use it as a hedge, or a protection, while stocks, bonds, or real estate do the cha-cha. You hope you never need it, but it’s great to know it’s there when the toast catches fire, just like having a fire extinguisher in the kitchen.
But there are some bad things hidden in the shadows. Physical bullion implies keeping it safe. You should keep it out of sight and away from people who are clumsy. Safe in the bank? Are you safe at home? Make a hole in the backyard? Each has its own dangers and costs. Then there’s the issue of trade. There is always a spread because dealers need to earn money. You purchase higher and sell lower. You can’t expect to buy at the price you see online in the middle of the day.
And taxes. Some places tax gold as if it were a collectible. That means that any profit could hurt more than gains on stocks. Not the best news for people who want a clean tax refund.
But liquidity tips the scales back. Need some money? In most countries, it’s straightforward to trade gold. It’s not hard to locate a buyer. You can go to a local coin shop, log on to a bullion broker, or sell online. That painting that has been in the family for generations or that piece of property that no one wants is not as valuable.
Everyone has their own point of view. Some people buy gold because their grandma told them to. Some people just want to feel like they have something “real.” But if you want to make a lot of money right away, you might want to seek somewhere else. Gold moves at its own pace, which is often very slow. Its principal job is protection, not wild expansion.
What does it all mean? A wise investor can fit gold bars into their hoard. It’s important to diversify your investments, and having a gold bar hidden away as financial protection will make you feel better. Don’t put all your eggs in one basket, and always think twice before you dig that bunker in your backyard. Old comforts might sometimes last longer than we think they would.