A common question among new investors is “Why buy physical gold?”. Investment in gold can take any of a number of different forms, including speculative investments such as unallocated or allocated gold certificates, gold ETF’s and gold-linked investment funds, but having ownership of physical gold in the form of bullion or coins gives you more control over your investment.
Avoid Third Parties
With an increasingly unpredictable investment landscape, it makes sense to avoid having to rely on third parties for your mid to long term personal wealth. When acquiring unallocated or allocated shares in gold one is at the mercy of the possessor of the actual gold whether it is a bank or a storage service, whereas if you purchase physical gold you will not be reliant on the asset value of the holder of your gold shares.
When in possession of your own physical gold, you also avoid storage costs, commissions, and transport and other fees. Be aware, however, that if you intend to insure your gold, insurance costs will likely be high for gold in your personal possession. In addition, the private possession of gold bars removes them from the category of ‘good delivery’ gold, meaning that you may have to bear the cost of an assay before being able to sell it, thereby reducing your return on investment.
Safeguard against Market Volatility
Ownership of physical gold should form the mainstay of your investment portfolio, with other investments being looked at for shorter term returns or speculative trading. Alternatively, for those investors who already have a diverse range of investments in paper and certificates, physical gold offers the opportunity to secure a portion of their portfolio in an asset that will act as a safeguard against the volatility of the market.
Gold will always have value, and although this may vary over time, gold will never completely lose its value, as can sometimes happen with stocks and shares. For those who have lost faith in the banking system as a whole or even in their national currency, gold offers a safe haven. When you buy physical gold, the value is not linked to the performance of a particular currency, nor is it reliant on strong economic growth, but only on the spot price of the precious metal, which historically has always been resilient enough to ride out tough economic times.