Top 20 reasons to invest in physical gold

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Written By Mark

Mark is the co-owner of Seninvest and has many years of experience in financial markets. 

Physical gold, which includes gold coins, gold bullions, and gold rounds, has long been an awe-inspiring commodity to own for its timeless beauty and history that makes it so attractive to many investors for IRA diversification. Don’t forget to read our gold IRA company guide to help you get started.

In the meantime, there are at least 20 reasons to invest in physical gold, including:

It Enables You to Take Physical Hold of Your Investment

There are various ways to invest in gold, including gold EFTs, gold futures contracts, and gold mining stocks.

However, in such cases, the trust company still retains ownership of the gold while the investors simply receive a percentage of dividends based on their number of shares. In other words, they do not have actual access to the gold.

But purchasing physical gold means it is yours, and you can take possession of it anytime you want from the gold depository’s storage vault, or you can store your gold bars, coins, and more at home in your own storage vault.

In either case, you actually own it and can do what you want with it.

Physical Gold Makes a Good Private Investment

Unlike other investments that carry a paper trail, the acquiring of physical gold is anonymous, meaning the sale is kept private between you and the seller. The location of the gold depository’s vault is even unknown.

Therefore, if you want a more low-key way to own investments, purchasing physical gold is one way to do it.

However, you are still required to report your sales and capital gains on your income taxes.

Physical Gold Cannot be Stolen by Hacking

Physical gold coins and bars differ from digital coins in that they are tangible assets. Hence, they do not require access to the internet to store, acquire, and sell them on cryptocurrency exchanges.

This means they cannot be erased, transferred, or stolen by hackers using an account number or electronic address. Not even a brokerage account provides this protection.

Therefore, physical gold is also a great way to own investments outside of the digital world if it crashes.

Gold’s Protection is the Strongest of all the Precious Metals

Gold differs from silver, palladium, and platinum precious metals in that they are mostly used for industrial purposes. Hence, their value is dependent on economic demand.

However, gold is money, which means it has a long-term store of value even during economic downturns when history has repeatedly shown that other precious metals tend to lose their worth.

Thus, gold is a better precious metal to own during recessions than silver and other precious metals.

It’s More Liquefiable Than Stocks

When you invest in physical gold coins and bars, they come with a stamp of purity attesting to their authenticity, which bullion dealers across the globe recognize; hence they will not hesitate to get them from you.

Trusted gold dealers also provide you with a guarantee certificate on the product.

This means you can easily sell them for cash to an online dealer, to a private dealer, or at your local coin store. Or they can simply be traded for goods.

On the other hand, the process of selling a share in your brokerage account or a piece of artwork from your collection, etc., can take days or even months to sell and for the funds to be settled in your account.

They also have limited acquirers, which can make them harder to sell. And even once you do sell them, you may be hit with commission costs, which can cut into your return on investment.

You Don’t Need Specialized Knowledge to Invest in Gold

Many investments assets, such as shares, trading cards, sports memorabilia, artwork, and antiques, require specific knowledge to invest in them.

However, to invest in gold requires no know-how. It also doesn’t require specialized equipment like gemstones to determine its value, so anyone can invest in it.

Like other investments, you’re also not acquiring it in speculation of getting more money than what you paid for it. Instead, your investment in gold should be to protect you against a financial crisis when fiat currency has significantly lost its value.

It Has A Limited Supply, So It’s Worth More

New gold mines are only created every 5 to 10 years. Furthermore, their production has been on the decline since the early 2,000s; hence, the gold supply provided by central banks is limited.

Hence, its scarcity makes it more valuable and thus results in a higher value for it.

It’s High in Demand Worldwide

As more and more investors are seeing the benefits of gold, the demand for it as an investment asset has increased among many of the world’s largest EFT and gold bullion dealers.

Meanwhile, in many countries, gold is a traditional form of saving, while in others, it has many uses, from jewelry to gifting.

Hence, there is also a steady demand for gold in many cultures worldwide, especially during peak seasons of celebrations, such as weddings, births, and more.

It Can Offset Inflation

For more than a half-century, the value of gold has increased during periods of high inflation and equity market plunges.

This is because, during times of inflation, it decreases the amount that fiat currency can obtain. However, the cost of gold tends to rise with the cost of living, so it’s an excellent way to hedge against inflation.

This is in part because gold is seen as a good store of value, so many people tend to invest in it when their currency’s worth begins to decline, which increases its value.

It Can Also Be Used to Balance the Effects of Deflation

A sudden drop in value can also affect the economy and local currency value; however, history shows that the cost of gold also tends to increase during these times due to the increased demand for it.

Hence, it can also be used to hedge against deflation.

It Can Be Used to Hedge Your Equity Portfolio

To offset market volatility and risk associated with your stock portfolio, you need to have a mixture of investments that are not closely related to each other.

This way, if the equity market crashes, it won’t affect your other investments.

For the longest time, gold prices have risen during major equity market declines. Hence, many investors view it as an asset that will increase in value when the equities in their portfolio fall.

It Helps Preserve Your Wealth During Times of World Crisis

When world tensions are on the rise, whether it’s an embargo or the threat of war, it puts the livelihood of all citizens at risk.

Hence, many people turn to it during times of world crisis for its relative safety during uncertain times, thus, in turn, causing gold to experience some major cost hikes over other investments.

In fact, the more the worry increases, the more gold will be sought after, and the higher its value will continue to rise.

As the ounce of gold reaches all-time highs, it also presents an opportunity to generate profits, depending on the severity of the crisis.

It Can be Used to Secure Financing

Given gold’s high value and ease of liquidity in the market, it is fairly easy to get a loan against it during emergency times.

And since the loan is backed by collateral, it will cost you less to borrow the funds than a traditional loan.

Gold can also be lent and used as a way to generate interest.

In fact, bullion banks and central banks frequently lend large quantities of gold to each other to receive interest and financing.

It Doesn’t Require Special Care

Gold is chemically unreactive, and it also doesn’t oxidize when exposed to air and moisture.

Therefore, it can be safely stored away for centuries with little to no maintenance and never lose its high shine and vivid glow. Hence, you can store your gold with confidence, knowing it will still maintain its value even without specialized care.

It also doesn’t take a lot of space to store it. In fact, you can store more value in gold in something as small as a safety deposit box than you can a bundle of paper money.

It also comes with low carrying costs, or you can simply store it in a small safe in your home.

It Can be Passed on as Part of Your Inheritance

Because gold is a highly liquid, tangible asset that maintains its value even through fire and natural disasters, it can also be easily passed on to your children and family members as a generational wealth transfer.

You can also get it in weight denominations that make it easier to be distributed equally among recipients in your wills and trusts.

Meanwhile, gold coins and bars acquired from the world’s major mint and gold refineries are beautifully distinct from each other, so they can also be used to create a historic collection on your way to building your investment for a more fascinating gift.

You can even exchange your gold coins and bars with many traders in the market to help grow your collection. Just be sure to verify the current market value so you can receive a fair trade.

It Protects Against Government Confiscations

During times of financial crisis, when the government needs more revenue, it tends to be more aggressive in its enforcement of wage garnishments and confiscation of funds. And many times, it will perform these actions without warning.

However, holding physical gold helps protect against such hostile actions, especially if some of it is held offshore.

Holding some of your gold offshore also creates an opportunity to invest in other options that may otherwise not be available to you.

It’s also easy to store your gold using professional vault storage offshore, so it’s there in times of economic or political turmoil.

It’s Accepted Worldwide

No matter where you go in the world, gold is accepted as currency because of its widespread sales and highly liquid global market.

This means even when you are away from home, your gold coins and bars can be used in emergencies.

In fact, gold coins are even issued to servicewomen and servicemen stationed in conflict areas during defense times as emergency currency.

It Gives More Peace of Mind Than Other Investments

As a real estate investor, late rental payments, emergency repairs, and property taxes can really dig into your pockets, which can keep you up at night.

Likewise, equity investors also have their share of worries, from plummeting market values to high portfolio management fees, which can also affect their peace of mind.

However, when you invest in gold, you simply set it aside maintenance-free until you need it. And even if you choose to store it in a professional storage vault, the fee is still low compared to the costs of other investments.

Gold Has No Risk of Collapse

Gold coins and bars are not issued by an authority; hence, they carry no risk of collapse like government-backed investments.

They also cannot be debased like fiat currency via government deficits and other political issues.

It brings the freedom of not having to trust another entity’s liability. It also means that your investment won’t go broke because gold will never lose value.

It Enables You to Make Small Investments at a Time

Some investments, such as real estate, may require you to put up a large sum all at once, which can make it harder to invest.

However, gold coins can be acquired in small increments, so they provide a more budget-friendly way for new investors to get started.

Just be sure to obtain your gold coins from a bank or reputable gold bullion dealer rather than in the market because they come with a certificate of authenticity, which will enable you to easily sell them in the future.

There you have it, at least 20 great reasons to invest in physical gold. And its myriad of benefits also makes it a reliable investment for your IRA.

Gold is an important asset class to own for IRA diversification, be sure to check out our guide on how to rollover a 401k plan to a gold IRA for more information.

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