Whenever you make a new investment, it pays to do your research. There are a few questions you should always ask yourself before you add a new product to your portfolio:
- What function does this product add to my portfolio another asset doesn’t already?
- Why is this asset a good one for me right now?
- What is the best way to buy into this asset?
As interest picks up in gold, you should ask yourself these questions about bullion assets.
- Bullion is both an inflation hedge and “portfolio insurance” against poor economic performance.
- Gold balances risk in your portfolio and can soften the impacts of a recession.
- Though there are many ways to buy gold, it depends on your goals and priorities.
There are lots of options for investing in gold, and it’s not always obvious which way will pay off best for you. If you’re a first-timer to the gold market, this guide to investing in gold starts with your goals and should inform you about how to proceed.
Option 1: You Want to Reduce Risks
Reducing risk is a major draw for gold buyers. If risk is your top concern, buying gold bullion is your best bet. Gold bullion gives you:
- More control over your investments, as it cuts counter-party risk out of the equation.
- A cushion against inflation.
- Mitigation against the effects of a stock market correction. Gold props up riskier income stream investments like income-paying stocks.
As a first-time buyer, coins are the easiest form of bullion to navigate, as they are widely sold and widely accepted. Focus on North American coins like the Canadian Maple Leaf and the US Gold Eagle for the most widespread accessibility. Do your research and find a reputable bullion dealer; you can save by going with an online dealer you trust.
Option 2: You Want Convenience
The convenient route might lead to you to ETFs, a way of indirectly investing in metals and doing it through paper/digital means. Buying an ETF means you don’t have to worry about buying a safe or paying for insurance. The downside of an ETF is that you still won’t actually own any bullion.
Option 3: You Want Big Growth
If you want big growth from your bullion investments, you may not want to look at gold at all, but focus your attention on silver. Silver is an undervalued asset according to the gold-silver ratio, which is has reached historical highs. In the past, as commodity prices have climbed, that ratio has shrank as silver prices appreciate more rapidly.
Option 4: You Want to Pay the Lowest Premiums
The fastest path to lower premiums is buying bars and rounds. Made by private refiners instead of national mints, these have lower costs per ounce to manufacture and the savings are passed on to you. You can save considerably and still get the same quality and weight. Paying lower premiums can improve your margins.
Choose the option that fits your personal financial goals best.