Whenever people worry about the economy, inflation or have general uncertainty about their future, they invest in gold. There’s a few ways you can go about it and this article covers the safest options to protect your wealth.
What’s the safest way to buy gold? The answer depends on if you want to buy physical gold or if you are thinking of investing in paper assets like gold mining stocks.
If you are just buying paper assets, you can work with any investment company to do so. And is it safe? It can be, but you won’t get the benefits of owning a tangible asset like you do when you buy gold coins or bars.
Now, if you want to buy actual gold that you can hold in your hand, the safest way to do that is to work with a reputable dealer like Swiss America that has been around for over 40 years. This article covers why people invest in gold, the ways you can invest and how to get started.
Benefits of investing in gold
There’s many reasons why investors choose to buy and hold gold as part of their overall portfolio, such as:
Inflation hedge
Gold retains its value when inflation rises or when paper money weakens. Unlike cash, which can lose purchasing power, gold remains a reliable way to protect your wealth.
Government central banks also rely on gold for portfolio protection, and as of Q2 2024, their purchases have increased 6% year over year. In fact, central banks have been buying gold since 2023, per the chart below from Gold.org:
Diversification
Investors add gold to their portfolios to diversify their assets and reduce risks. Because stocks and bonds are unpredictable, they hold gold as a way to preserve wealth. That’s why you’ll see experts recommend holding about 5%-15% of your portfolio in gold assets.
Morningstar produced the chart below, which compares the long-term growth of gold with other asset classes:
Easy to transport and convert to cash
Gold’s high value in small quantities makes it easy to store and transport. As of this writing, gold is about $2,500 an ounce. This means that you can carry about $25,000 worth of wealth in a bar roughly the size of a cell phone.
People around the world recognize and value gold, so it is easy to sell and trade in different markets. This global liquidity makes it a convenient investment that you can quickly convert into cash almost anywhere.
No counterparty risk
Gold doesn’t rely on a third party for ownership. It doesn’t matter if a company has a bad quarter, a bank goes under, or a cyber attack shuts down digital trading. Physical gold coins or bars don’t depend on any of that.
The chart below from Banking Strategist shows the FDIC-related loss on the latest bank failures:
5 safe ways to invest in gold
You have several options to buy gold. Here are the top 5:
Option 1: Investing in gold bars and coins
This is the most direct way to invest in gold and gives you all of the benefits we shared above. Owning gold bullion coins or bars gives you a tangible asset and a way to reduce your risk against economic uncertainty, inflation, and catastrophic events.
Investors choose physical gold because they want the security of a physical asset. Reddit user Lowpro50 from the r/Gold forum shared their specific reasons for buying gold as “Long term savings w/out 3rd party counter risk and currency devaluation”.
Option 2: Gold IRA
You can use a portion of your retirement account to invest in gold bars or coins. The way this works is that you convert your existing IRA or roll over your previous employer’s 401k to a self-directed IRA. You’ll choose a precious metal custodian to manage your account and guide them on which assets you want to buy.
There are a few rules for these accounts, such as which metals qualify and whether your custodian must handle the storage until you retire.
Option 3: Gold stocks
You can invest in various gold stocks, like gold mining companies. These stocks follow the price of gold but are also affected by how well the company performs and overall market trends.
While this lets you benefit from both gold and the company’s growth, the value of the stock can rise or fall depending on factors beyond gold prices that bring additional risk.
Option 4: Gold funds
Pooled funds like exchange-traded funds (ETFs) or gold mutual funds let you invest in gold through a mix of assets. Since these funds get traded on stock exchanges, they lower the risk compared to owning only one type of gold investment. However, there are management fees, and the performance of the fund may not always match gold prices exactly.
Option 5: Gold futures
Gold futures are contracts where investors agree to buy or sell gold at a set price on a future date. You can control a large amount of gold with less upfront capital, which can lead to bigger gains but also comes with high risk.
Considerations for buying physical gold
When you’re ready to buy gold bullion, here are some additional details to consider:
Characteristics
Gold purity affects its value and is measured in karats or as a percentage. 99.9% pure gold is 24 karats. The higher the purity, the higher the value.
If you are buying gold in an IRA account, the IRS has specific rules about purity and authenticity. The Swiss America team can help guide you through this process.
People measure gold in troy ounces which is the standard weight for all precious metals.
Premium over spot price
Spot price is the current market value of gold, but it’s not what you’ll pay. There are costs for manufacturing and distribution that determine the price per ounce. This delta between spot and retail cost is the premium.
You’ll also have transportation and potentially sales taxes to consider.
Storage and insurance
After buying gold, you’ll need to store it to protect it from theft or damage. You should also check if your homeowner’s or renter’s insurance covers your gold. If not, you can consider adding a specialized policy for precious metals.
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How to invest in physical gold
It’s easy to get started owning physical gold bars and coins in just a few steps:
Choose a dealer
Look for dealers like Swiss America that have been in business for decades and have great customer reviews. Check for licensing and certifications to make sure that you’re dealing with a trustworthy source. You want to work with a dealer that’s transparent about pricing, return policies, and gold purity.
Buy gold bars and coins
Decide if you want to buy gold coins or bars. Many people like coins because they’re easy to trade and come in different designs and sizes. If you’re investing a larger amount, gold bars are more cost-effective since the premiums are lower per ounce.
Monitor your account
You can check the status of your investments at any time using Swiss America’s online portal. Here, you can see the real-time status of your portfolio and get liquidation quotes and investment recommendations.
Why investors choose Swiss America
When you’re ready to buy physical gold as your investment, here’s why thousands of investors use Swiss America:
Over 40 years of experience: Since the early 1980s, we have successfully guided investors through different economic and market changes. Our decades of expertise make us your reliable partner for buying precious metals.
Satisfied clients: Our broad client base appreciates the timely delivery of high-quality metals, responsive customer service, and consistent performance that meets or exceeds expectations.
Expert guidance: We provide expert advice on storage, precious metals IRAs, portfolio integration, gold-to-silver ratio decision-making, and market trends to help you make smart decisions.
Competitive and transparent pricing: With competitive rates and clear pricing, you’ll always know the exact cost of your precious metals investment.
Gold trade program: With our gold trade program, you can sell your gold back to us whenever you need to. This gives you liquidity for emergencies or portfolio adjustments and makes selling gold easy.
Best way to buy gold
There’s many ways you can invest in gold but the best way to actually own the physical asset. No other approach gives you the same control and independence from stock market ups and downs or economic uncertainty.
If you want to learn more about investing in gold bullion, connect with the Swiss America team today!
Safest way to buy gold: FAQ
What is the safest way to buy gold?
Buying from trusted sellers is your safest option. Across the world, countries widely accept gold which makes it a secure investment choice.
What is the safest way to invest in gold?
The safest way is to spread your money into different gold investments. This could be owning physical gold, buying gold-backed funds, and investing in gold mining companies. This will help lower your risk while letting you benefit from gold’s ability to protect its value against economic troubles.
What is the most profitable way to buy gold?
It depends on market conditions, but many investors choose to buy physical gold, like coins or bars, and hold onto it long-term, which can offer solid returns.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
