What are the pros and cons of investing in gold bullion? If you’re wondering if gold bullion is the right investment, read on to learn why now may be a great time to start investing in gold bullion.
Investing in gold bullion has pros and cons, and what’s right for one investor may not work for another.
There’s a lot of interest right now in the gold market since gold has been hovering near all-time highs. That’s natural though, when we start to see gold prices increase, we see a lot of people selling gold. It’s during this time when investors begin to wonder if it’ is the right’s a good time to starting adding physical gold to their investment portfolios. Gold can still be volatile at times, but many people view gold as a safe-haven asset, just like they do with silver. Safe-haven investments can offer protection in times of uncertainty, and with tensions running as high as they are now, it’s a sound investment choice for those of you that are looking to preserve their wealth.
What Are The Pros Of Investing In Gold Bullion?
1. Gold can protect your wealth — As we just touched on, gold is known to be one of the best safe-haven assets in the world. In times of trouble and turmoil, investors often look to precious metals to safe guard their wealth. When political and economic uncertainty are rife, legal tender generally takes a backseat to assets like gold and silver. When you look at the world today, it’s fair to say “tensions” are high, so adding gold to your portfolio is a solid idea.
2. Gold is a tangible asset — Although cash, bonds, and mining stocks are accepted forms of wealth, they are still digital promissory notes. Due to this, they are all vulnerable to depreciation due to actions like printing money. A troy ounce of gold bullion, on the other hand, is a finite tangible asset. That means that, although it is vulnerable to market fluctuations like other commodities, physical gold isn’t likely to completely crash because of its inherent and real value. The good news, they’re a lot of ways you can buy gold bullion, such as gold coins or gold jewelry, or they can buy gold bullion bars.
3. Gold is very valuable — At the time of writing this article, gold is sitting at just over $2K an ounce. Compared to gold bullion, the silver is not only less expensive and therefore more accessible to buy, but it’s also more versatile to spend. That means if you are looking to buy silver in the form of a coin to use as currency, it will be easier to break than a gold coin because silver has a much lower value. It’s common to see stores today not taking bills higher than $20, cashing a $100 would definitely be a huge challenge. As a result, silver bullion is more practical and versatile.
4. Gold Silver Ratio — At the time this is being written, the Gold Silver Ratio is 89. That means you would need 89 ounces of silver to equal one once of gold. When the first coins were made over 2,500 years ago in ancient Greece, the ratio of gold to silver was generally between 10:1 and 15:1, depending on the relative proximity of gold or silver mines. Wow, can you imagine if we see a 10/15 to 1 ratio today?
In this mid 1900s, the ratio reached 90:1 or higher, and in 1991 it peaked at about 98:1, it has been well over 100:1 also. While silver is currently worth around 1/89th the price of gold, many people still prefer buying gold bullion versus silver bullion. Both precious metals have their cases, silver is likely very undervalued. Gold could also be undervalued, it has a legit chance of reaching $5K an ounce or more in the right conditions.
5. Gold is trusted — Silver and gold have been used as legal tender for centuries, that stability matters. Many buyers find comfort in knowing that gold has been recognized for its value throughout a great deal of mankind’s history, and so there’s an expectation that it will endure while a fiat currency may fall to the wayside. When individuals invest in physical gold, there is a reassurance that the metal has value that will continue to persist.
6. Gold and future use case – The good news for those of you that stack gold bullion, gold is becoming more rare every day that passes. Gold is used in a lot of different ways besides just jewelry, bullion, and coinage. Because of its inherent properties, gold is used in the medical, electronics, automotive, defense and aerospace industries. It is also increasingly used as a catalyst in many industrial processes, it has many medical applicational uses as well. In short, gold is used a lot and that demand is only going to grow.
What Are The Cons Of Investing In Gold Bullion?
1. Turning gold to cash — For those of you that hold physical gold, it may be tough to turn that gold into cash. If you need to get groceries or pay the electric bill, you won’t be able to pay it using gold bullion bars or a gold bullion coins, you would need to convert your gold into cash. If you don’t have access to a gold bullion dealer or coin shop, it may be a challenge to convert your gold to fiat cash.
2. Theft is always a risk — Many investments such as stocks, ETFs, and digital assets like crypto don’t require physical space to hold. If you’re holding gold bullion, you’re always at risk and vulnerable to theft. The more gold you have, the more your risks you have. We always recommend investing in security, that could be cameras, alarms, and safes.
3. Gold has a low ROI versus other assets — Although gold bullion may be a good safe-haven asset, it really hasn’t performed as well as other assets, such as Bitcoin, real estate or even other precious metals. If your goal is ROI, you may want to consider trying gold mining stocks, especially if those gold stocks pay dividends. Royalty and streaming companies are another option for those interested in investing in gold, as are exchange-traded funds and gold futures.
4. High gold demand leads to higher premiums — We’ve seen a lot of interest for gold in 2024 so far – the exact gold price right now is $2,031 an ounce. When investors try to buy any bullion product, such as an 1oz American Gold Coins – or 1oz Gold Buffaloes, they quickly find out that the physical gold price is usually way higher than the gold spot price due to premiums. In 2024, we’ve seen gold and silver premiums come down. Still, if demand is high, premiums can go up fast, making the purchase of physical gold bullion more expensive and a less attractive investment.
How To Add Gold Bullion To Your Stack
If you’re looking to buy gold bullion for your stack, we have you covered, we have a wide selection of gold bullion for sale. We can help you buy gold bars, gold rounds, gold American Eagles, and much more.
We also buy gold, if you’re trying to sell your gold coins or gold bars, be sure to give us a call, or use this form to reach out.