Investing in gold, like investing in any other commodity, is a way to diversify your portfolio and hedge against inflation. The value of gold has risen steadily for the past century or so, and it’s not uncommon for people to use it as a store of value. However, because of its volatility and low liquidity, we don’t recommend investing in gold as part of your retirement plan.
What Is Gold?
Gold is a soft, shiny metal that’s used for jewelry and other decorative items. It’s also one of the most widely traded commodities in the world.
The price of gold fluctuates throughout the day based on supply and demand.
How Does Investing in Gold Work?
Investing in physical gold isn’t very common because it can be difficult to find storage space for large amounts of gold bullion and sell it quickly when you need cash. Instead, investors typically buy shares of companies that invest in gold mining companies or exchange-traded funds (ETFs) that track the price of gold bullion. These investments have lower fees than buying and storing actual bars of gold but still give you exposure to this volatile asset class.
Investing in gold can also be a way for investors to hedge against inflation. The price of gold tends to rise when inflation is high and the economy is struggling because people see it as a safe haven. If you’re worried about an economic downturn or other market events that might cause your portfolio value to drop, adding some gold bullion can help offset those losses.
How Do I Buy Gold?
You can buy gold in several ways. If you’re looking to invest in physical gold, visit your local coin shop or pawnshop. They’ll be able to sell you bars and coins with a small markup based on the current market price. You can also buy gold online from a variety of dealers. These companies typically charge fees that are lower than those at brick-and-mortar stores but higher than exchanges for ETFs or mining stocks.