Gold is not only a great way to diversify an investment portfolio, but has also been a reliable investment commodity for throughout history. Take a look at why many investors choose to include gold in their investment portfolio:
Over the decades, gold has generally been trusted as a wealth-preserving commodity holding its value during financial upsets. This is because gold can not be created like other currency with an assigned value. While currency fluctuates and weakens, gold tends to stay strong and not waiver much in value.
Diversification and Protection
Most investors stick to traditional investments such as stocks and bonds. However, a lack of diversification could put them in danger if things start to go downhill. Having a nontraditional investment like gold can help protect their portfolio from volatile times. While the value of the dollar has dropped, the value of gold has actually risen.
Types of Gold Investments
Gold Bullion– The value of a gold bullion is determined by the market price of gold at the time of purchase and it comes in two forms.
- Bars: Gold bars are not generally kept in physical possession of the investor. The larger sized bars are usually only purchased by larger companies and organizations instead of individuals. However, there are smaller bars that are kept by individuals.
- Coins: Gold coins are minted in several different one ounce forms ranging from 1/10 oz. to 1 kilo. The smaller coins are most popular among individual investors.
Jewelry/Coins with Artistic Value– Numismatic coins and jewelry made of gold are also purchased for their cultural, historical, or aesthetic appeal. Generally this leads to their value increasing faster in a bull market. In a bear market, they will decrease faster.
Gold Mining Stocks- With this, investors are buying a share in a gold mining company. Share prices are subject to a variety of factoring including performance of company management, auditors and geologists, cost basis, and the environmental and economic risk of the company.
Gold ETFs– Gold Exchange Trade Funds are products that track the price of gold and are traded on major stock market exchanges. They are not all backed by physical gold.
To learn more about investing in gold using a self-directed IRA, contact Mountain West IRA or visit their website. It breaks down what types of gold investments are allowed in a self-directed IRA and how they are handled.