Can You Hold Physical Gold?

Can you hold physical gold

Gold can serve as an attractive diversifier in an investment portfolio, providing an anchor in times of volatility; however, unlike stocks and bonds it doesn’t generate income itself.

Physical gold comes with multiple costs, including storage and insurance fees. Investors should also keep taxes in mind when purchasing physical gold.

Precious Metal

Physical bullion may be one way to invest in precious metals, although there may be additional expenses associated with its safe storage and insurance costs. Investors can also buy futures contracts or shares of gold mining companies to speculate on price increases.

Precious metals have long been seen as an alternative investment option to stocks and bonds due to their relative inflexibility, serving as an insurance against inflation and political unrest. Unfortunately, though they provide no yield and any profits must be reported when sold – an important consideration when investing.

Customers can purchase precious metals through both online dealers and traditional jewelry stores, though it’s essential that buyers do their due diligence prior to making a purchase decision. Before confirming whether the dealer you buy from is licensed to sell precious metals. Keeping holdings private may help decrease theft risk; additionally, buyers should try not buying unallocated or commingled bullion to save storage and insurance costs.

Store of Value

Gold has long been revered as a store of value in many cultures around the globe, making it an attractive asset during times of global uncertainty such as 2020’s coronavirus outbreak.

Silver and platinum also act as store of wealth, but are less popular options among high-net-worth individuals due to being more difficult to access in times of emergency. Therefore, many investors prefer physical gold coins and bars instead.

When purchasing physical bullion, ensure it has sufficient purity to withstand time. A lack of sufficient purity could significantly lower the investment value of your holdings; be sure to do your research beforehand on its quality before buying. Also keep storage fees in mind which may vary depending on where you choose to keep your gold.

Diversification

Gold’s low correlation to other asset classes makes it an invaluable diversifier in investment portfolios, providing protection during times of economic instability or inflationary worries. Furthermore, its role as a store of value acts to mitigate risk in times of turbulence while serving as an inflation hedge in times of inflationary pressures.

Physical gold is an attractive asset choice for investors seeking safe haven assets, as it is accessible and readily tradable across numerous countries worldwide. Unfortunately, owning it can be expensive with additional recurring fees like storage and insurance payments to consider.

Investment in gold through funds or ETFs may help reduce investment costs, but before adding it to your portfolio it is essential that you assess all of your goals carefully – taking into account such things as timeline until retirement and anticipated income needs (given that gold doesn’t produce income) should all be taken into consideration. Read up more on these strategies by consulting our guide to gold investing.

Taxes

As you invest in gold, be mindful of how taxes may impede your profits. Physical precious metals are subject to tax when sold for more than what was paid, compared with investments like stocks or bonds which are subject to long-term capital gains rates.

The IRS classifies physical gold as a collectible, similar to art or rare stamps. Therefore, any profit-generating sales of physical gold will incur taxes at up to 28%.

Conversely, investing in gold through ETFs or mutual funds is taxed as regular income at your federal rate and you may even be able to avoid capital gain tax altogether if you hold onto it for more than one year; or offset any gains with losses from prior years.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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