Is Physical Gold and Silver a Good Investment?
Gold and silver investments can provide an effective means of diversifying your portfolio, but be mindful that these assets tend to be more volatile than stocks, making storage costs prohibitive.
Precious metals are reliable stores of wealth that offer long-term purchasing power stability while offering protection from inflation. Furthermore, their correlation with stock markets and currencies remains relatively low.
No counterparty risk
Physical gold and silver do not involve counterparty risk like paper assets such as stocks or mutual funds do, making them attractive assets in times of financial panic. Physical precious metals remain readily available for purchase during times of panic trading at spot price for cash or other assets – providing a vital edge in times of turmoil.
Gold investments such as bullion bars or coins offer the safest solution to this risk, though you should bear in mind that these do not produce income and must be stored safely.
By purchasing gold through ETFs or financial derivatives, some risks (storage and insurance issues are taken care of for you) are offset, yet counterparty risk remains an issue – precious metals being tangible assets are immune from defaulting payments or going bankrupt unlike paper assets such as stocks can. They don’t need boards of directors either so manipulation shouldn’t occur in the same way.
No minimum deposit
There are various methods of investing in physical gold and silver, from trading ETFs to purchasing bars or coins. You can also invest through traditional brokerage accounts in mining company stocks or gold mutual funds; however, these investments shift some of the risk away from storage onto someone else. It is essential that investors carefully consider all costs related to investing this way before proceeding.
As with any purchase decision, one of the primary concerns when choosing a precious metal dealer should be whether or not they are licensed. Dealers also often charge different premium rates and have different policies regarding shipping, taxation and reporting – it is wise to do your research on potential dealers prior to making your selection.
Physical gold and silver have the advantage of low correlation with the stock market and can serve as a safe-haven in times of economic instability. Furthermore, their borderless nature means they can even serve as money. Unfortunately, owning physical bullion comes with certain drawbacks, including higher storage and insurance costs.
No tax
Physical gold and silver assets are exempt from capital gains taxes, though their prices can still be subject to inflation and market manipulation, creating a potential problem with regards to taxation; inflation itself being considered an implicit tax.
Investors who purchase bullion are likely to face a low capital gains tax rate of 18% as it is considered collectible item by the IRS. Investors should keep all invoices and receipts for income tax purposes.
Physical gold and silver may be difficult to access, but there are ways of making it more readily accessible. One option is buying it online which provides instant liquidity. But you should be aware that this requires security deposits and storage fees as well as being less valuable than physical bars due to additional formations or marking up over melt value as well as shipping, insurance and storage charges.
Easy to access
Physical precious metals offer an easy and safe way to diversify your portfolio. Not tied to financial markets’ performance, these assets have historically held their purchasing power over time – making them a reliable hedge against economic uncertainty. Furthermore, unlike stocks or real estate investments they do not depreciate over time like most investments would.
Investors can also gain exposure to gold and silver prices through financial derivatives, which offer more liquid means of doing so. However, such products may pose additional risks, including leverage and price volatility.
Physical bullion coins or bars offer investors an easy solution, with less theft risk, while still being easily stored at home or stored offsite in secure facilities with additional fees attached. They may however cost more in terms of storage fees; additionally, special care must be taken when trading them as they require special conditions to trade effectively. As another alternative investors may invest in ETFs which invest in gold and silver mining companies although this comes with additional expenses like management fees.
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