Have you ever thought about investing in precious metals? And of course, gold is at the top of the list. Every day, more and more investors and traders of different levels of experience are wondering how to invest in gold ira company.
As one of the oldest representations of value in human history, today gold still remains a haven of value for people, even when it is no longer a currency itself. Therefore, knowing how to invest in gold is a good tool and, definitely, a good alternative for your investment portfolio.
So if you’ve been wondering how I can invest in gold, you’ve come to the right place. At Libertex we tell you all the details and offer you a step-by-step guide so you can learn to invest in gold and silver without problems.
Advantages and disadvantages of raw materials
The main reason for choosing raw materials is stability . Both investing in gold and investing in silver or other raw materials tend to be options that cross your mind so quickly when thinking about investments, but that are then widely chosen by traders around the world.
The commodities market is characterized by long-term investments that, although they offer profits that may be lower than other assets such as currencies, are completely safe. Once you invest, you have a guaranteed financial return .
Most traders choose precious metals as safe haven assets in times of uncertainty . Therefore, it is very common to find them in economic portfolios as the main element of investment diversification.
However, like all financial markets, it has a disadvantage: commodities are difficult to predict . This occurs because there is a limited range of main factors that affect its price – many of a socioeconomic nature – and this makes it difficult to evaluate it to avoid falls.
Even so, they continue to be a very present asset in the portfolios of investors around the planet.
Gold: the main precious metal
Gold is the main precious metal by nature. Years go by and its validity continues, despite the fact that its role in the daily economy is no longer the same as it was a few centuries ago.
Today, in addition to being used in jewelry, it has other multiple uses both in industry and in electronics. And, of course, as an investment asset. For this reason, more and more people choose it as an alternative to invest and protect their money , becoming interested in the options of how to invest in gold on the stock market.
Likewise, it must be taken into account that gold prices are usually more vulnerable to external agents such as global inflation, economic instability and the monetary policy of central banks.
Why invest in gold?
It is known that gold has played a very important role in the economies of most countries throughout history. To the point that, although it is no longer a primary form of currency today, it is still a very solid and long-term investment , something that attracts traders and investors on a daily basis. Above all, when the market is bearish and/or when economic uncertainty reigns internationally.
Not for nothing, until a few decades ago, gold was still used as a world reserve currency. In fact, this idea of protection and reserve of value is still very present thanks to the characteristics of the price behavior of this precious metal.
For example, many investors turn to gold amid high inflation, as its enduring value makes it a solid investment that adds additional diversification. Even though it may seem strange – since the effect of inflation is to reduce the value of the currency over time – commodities such as gold are the exception to devaluation, and also enjoy a price increase with inflation.
This is one of the main reasons why many investors and traders turn to gold as a safe investment to protect their finances when all other assets begin to have tough times in terms of profits.
Therefore, investing in gold is a good alternative, which is also driven by an increase in demand that pushes its value up.
Advantages and disadvantages of investing in gold
Like any investment, gold also has its advantages and disadvantages that you must know before investing.
Among the advantages we can mention:
- Liquidity . Gold can be easily converted into cash anywhere in the world.
- Maintenance of value . Gold tends to maintain its value over time, making it a relatively stable investment compared to other assets. This is because there is a fixed amount of gold due to the fact that it is a commodity, with inherent value.
- Inflation coverage . As we mentioned, gold increases in value when inflation also increases. This happens because, once again, it is a commodity that, like all others, also increases in price. A characteristic that also contributes to investment stability, and allows you to protect money against inflation.
- Diversification . Because gold often moves inversely to stock and monetary values, it provides an effective way to diversify.
While, among the disadvantages, the following points stand out:
- It does not generate passive income . Unlike other investments, such as stocks and bonds, the only return on gold is through buying and selling and price speculation.
- It can create a bubble . When the economy is unstable, many people begin to invest in gold, disproportionately driving up the value due to the growth in demand—driven by investor panic. The problem is that this means your investment could lose value once the price corrects.
- High tax rates . Capital gains tax burdens are higher on most gold investments.
- It may be a suitable investment only at certain times . What is a great advantage in certain scenarios—inflationary, devaluation and/or high uncertainty—is correlated with the fact that in times of stability, gold may not offer the adequate returns expected from an investment.