Why Invest In Gold A Beginner's Guide

Why Invest In Gold A Beginner's Guide
Posted on February 12, 2024 by BOLD Precious Metals
As a timeless symbol of wealth, gold is still a wise addition to a diversified portfolio. How to invest in gold is a question that comes up when discussing gold, regardless of experience level. In this beginner's guide, let's examine gold bullion, interesting gold facts, why invest in gold, and beginner-friendly gold investing techniques.

Since gold has historically been purchased and sold, adding gold to your portfolio is easier than ever. However, only some are a good fit for gold investing, and risks are involved. If you're looking to invest in gold then discover all the essential information for purchasing gold as a beginner by continuing to read about why invest in gold.

    A Historical Analysis of Gold's Performance

Gold Price History

Time Period Key Events/Drivers Gold Price Range (per ounce)
Beginnings to End of Bretton Woods Gold's historical significance and use as currency N/A (Pre-1971 fixed at $35 per ounce)
1971 - 1980 End of Bretton Woods and economic uncertainty Sharp rise, up to $600 (1980)
1980s - 1990s Strong US dollar and stable global economy Decline, $300-$400
2000s - Pre-2008 Financial Crisis Inflation fears, weak US dollar, and global conflicts Gradual rise
2008 Financial Crisis Safe-haven demand amid crisis Above $1,000 (historic high)
Post-2008 to 2020 Ongoing economic uncertainty Approx. $1,900 (2011)
COVID-19 Pandemic (2020-2021) Monetary stimulus and low-interest rates Above $2,000 (peaked at $2,135)
Late 2023 onwards Continued economic uncertainty Range slightly above $2,000
“Gold will be around; gold will be money when the dollar and the euro and the yuan and the ringgit are mere memories.” — Richard Russell.

With this saying, knowing the history of gold is crucial. Gold has a unique and fascinating history, with its value and significance transcending time and geography. From its beginnings as part of ceremonial rites to its use as a currency and store of value, gold has played an essential role in human civilization for millennia. Today, gold remains a popular investment option, sought after by individuals and institutions alike for its perceived safety and potential for its increase in value.

  1. End of Bretton Woods (1971): The president of the US ordered the termination of gold-dollar convertibility, and hence, his administration was left with a free-floating price for gold. As a result, in the 1970s, sharp rises occurred caused by inflation and economic uncertainty, reaching up to $600 per ounce in 1980.
  2. 1980s - 1990s: After the high point hit in 1980, gold prices declined gradually, about $300-$400 per ounce. Failing trends of gold prices are due to the strong US dollar and a stable global economy.

  3. 2000s - Pre-2008 Financial Crisis: Gold, however, started a gradual spike in the early 2000s because of fear over inflation and recession, the weak U.S. dollar, and political conflicts on a global scale, among other factors.

  • 2008 Financial Crisis: The crisis resulted in a dramatic rise in gold prices. Investors chose gold as a safe asset, driving the price above $ 1,000 troy per ounce for the first time in history.

  • Post-2008 to 2020:Following the crisis, gold continued its rise, reaching approximately $ 1900 per ounce in 2011, and it is going to remain high because of ongoing economic uncertainty.

  • COVID-19 Pandemic (2020-2021):The pandemic increased gold prices to new highs, even going beyond $2000 per ounce due to monetary stimulus packages put in place complemented with low-interest rates. Globally, there was a lot of uncertainty created by the impact of COVID-19.
  • After the pandemic peaked, gold prices dropped to a trading range of $1,700 to $1,900 before rising sharply to new all-time highs of $2,135 in late 2023. After that, it dropped to a range slightly above $2,000. it is seen that the value of gold increases with time therefore consider adding gold in your portfolio.

        Why Invest in Gold?

    Traditionally, investors use gold to hedge their assets and diversify their investment portfolios. Gold is a very safe haven and typically can survive inflation.

    The advantages of investing in gold are plenty.

    Potential Hedge Against Inflation: Some of your portfolio should be invested in gold because the metal has always retained its value through time, protecting and reducing the losses brought about by high inflation.

    • Liquid Asset: Because gold has high liquidity, it can easily be bought and sold in various forms. You can enter the gold market in whichever way you like through gold bullion such as coins or bars.
    • Diversified Investment Portfolio: Enriching your portfolio with gold can be a suitable diversification method and reduce the overall risk exposure, potentially leading to improved long-term results.
    • Safe Haven Asset: When the markets are volatile, during economic crashes, or in severe geopolitical conflict, gold as an investment is usually considered a safe.

    So, why invest in gold? Because of inflation hedge , is liquid, diversifies an investment portfolio, and provides a safe haven in periods of instability.

        How to Invest in Gold for Beginners?

    If you start with gold investments, you may consider various options.

  • Gold IRAs

    Diversifying your retirement portfolio is possible by transferring funds from your current individual retirement account (IRA) to a gold IRA. You can choose a Roth gold IRA, funded with after-tax dollars, as an alternative to a traditional gold IRA. The traditional gold IRA allows your money to grow tax-deferred over time, while a Roth gold IRA ensures that any retirement distributions you take will be exempt from taxation.


  • Physical Gold

    Physical gold comes in the form of many coins and bars. the gold coins offers liquidity and gold bars offer long-term investment opportunity. Even though you may be fond to hold physical gold and how it feels and looks, it is essential to remember that besides owning gold, its storage and insurance have also become necessary. ROI in gold depends on the increase or decrease of its price, and it is commonly measured as a percentage. Many forms of direct gold purchasing are available, for instance, by reliable gold dealers, collectors, and pawn shops. The price depends on the purity of the gold in this coin or bar and its current market rate. BOLD has a wide selection of gold bullion, which is offered at very affordable prices.


  • Gold Futures

    Gold futures are another way of gold investment, but they are also very risky for beginners since they have high levels of speculation.

  •     Fun Facts About Gold

    Fun Facts About Gold
    • Au is the element symbol for gold. The Latin word for gold, aurum, is where the term originates. The meaning of the name is "glow of sunrise" or "shining dawn".
    • Welsh gold is extremely valuable gold due to its rarity and place of origin. It is gold found in Wales. Welsh gold is no longer mined and is regarded as extremely rare.
    • Every precious metal has an ISO 4217 currency code, with gold designated as XAU.
    • About 1.5 tonnes of gold was in the coffin discovered in Tutankhamun's tomb.
    • Finding a one-troy-ounce gold nugget is rarer than a five-carat diamond.
    • The King James Bible contains over 400 references to Gold.
    • 142,000 tons of gold are thought to have been mined historically.
    • Australian scientists have discovered gold particles absorbed by eucalyptus tree leaves.
    • A cube with 68 sides could hold all the gold ever extracted from the planet.
    • In 1885, Australian miner George Harrison discovered gold ore close to Johannesburg while removing stones for construction. This discovery sparked the South African gold rush.

        Factors to Consider Before Investing in Gold

    Factors to Consider Before Investing in Gold
    • Evaluating Investment Objectives and Risk Tolerance: While gold is usually considered a relatively safe investment compared to the other categories of investments, short-term gold prices are very highly volatile. That is why, before investing in gold, it's essential to establish your risk tolerance level and investment objectives.
    • Understanding Market Trends and Gold Prices: Newer products, innovation, shifting gold demand patterns, and regulatory changes contribute to the gold market's ongoing, unparalleled transformation. Therefore, knowing market trends and price swings is crucial before investing in any gold asset.
    • Storage and Insurance for Physical Gold: Finally, but not less important, is providing appropriate storage for the physical gold. Though you can keep your gold at home, storing it in a safe deposit box or with a reliable custodian is better. BOLD Precious Metals suggests some of the most reliable depositories for safely storing your gold and other precious possessions.

        Steps to Buy Gold for Beginners

    1. Step 1: Clearly understand the part gold should play in your entire portfolio.
    2. Step 2: Determine the percentage of your portfolio that should be allocated to gold.
    3. Step 3: Align the selections in your portfolio with your goals.
    4. Step 4: Choose a reputable and trustworthy precious metals dealer.
    5. Step 5: Do thorough research and make an informed decision

    Conclusion

    Owning gold in your portfolio can hedge against inflation . Gold historically has been adequately safe asset particularly in recent years of inflation. However, it is always necessary to determine the type of asset investment best suited to your objectives and to be relevant in light of economic factors.

    The disciplined way to start a gold investment is by starting little and progressively settling as you put resources into it. When making the savvy decision to buy from BOLD, you should have no worries regarding quality bullion. Buy gold bars and coins at lowest cost from BOLD. We are an authorized dealer with the following reputable mints – Scottsdale, Perth, and Golden State Mint.

    The fact that you should consider investing your money in gold will be related to your financial goals and risk tolerance level. BOLD Precious Metals is a reliable partner that guarantees the authenticity of the pricing process and adequacy of selling arrangements. Above all, it provides the investment picture of precious metals as a source of reliability.Thus, "Why Invest in Gold?" can be answered as it's a precious asset with an extensive past and the potential to provide long-term financial stability.

        FAQs

    Should I invest in gold?

    Take into account your time horizon, risk tolerance, and retirement income requirements when deciding if gold is a good investment for you. Take fees, storage costs, and other costs into account when deciding before investing in gold.

    Is it safe to invest in gold?

    Generally speaking, gold is regarded as a low-risk, secure investment. Precious metals may lessen some of the losses you incur in your stock or bond allocations during market volatility, which is why many gold investors are drawn to them. One reason gold's price tends to rise during market downturns is its allure as a safe haven.


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