Investing in physical gold–is it still profitable?
Nowadays the capital investment market provides lots of opportunities, options and solutions for investors. Due to the fact that the development of the worldwide investments market is getting bigger and bigger, it causes a lot of wonderings and questions for investors, who have just begun their investment's journey. The question they made is which way of investing is the most profitable and causes the least risk? So far there are plenty of options like bullions coins or bars which makes it not such an easy task. For those who are interested in investment, the most important thing is: how to invest capital to make it as safe as possible? Which of them minimizes the probability of losses up to zero?
It is known that one of the most affordable and safe options in the investment market is to locate capital into physical gold. It is an answer for those who are still looking for financial stability and for those who want to sleep calmly during the night.
A brief history of physical gold
Physical gold is commonly known as a precious metal. Over the years physical gold has gained many true followers all around the world. Let us check what is the secret and the main advantages of stock gold. And why has stock gold earned the trust of such a large group of people?
At the very beginning, let us emphasize that, above all, investment gold cannot be denied its uniqueness. Due to its everlasting beauty, brilliance and durability, investment gold has been appreciated since antiquity. The beginnings of minting the first gold deposit products in the form of coins date back to the 6th century BCE, i.e. the reign of the Lydian king Croesus, who can be considered a pioneer in this field. 6th century BC is therefore the time when investment gold was noticed by a wider group of recipients, and thus its role began to grow rapidly.
In later centuries, the love of gold was still high - after all, it was investment gold at the end of the 19th century that became the basis of the international monetary system, commonly referred to as the gold standard.
Therefore, given the importance of investment gold for economies over the centuries and how deeply rooted it is in human history, the current monetary system is somewhat of a "young experiment".
Gold investment vs monetary system
It should not be a surprise for anybody that the current monetary system has struggled with all sorts of problems since it has started to exist.
Let us think about what is cash? It is a piece of paper covered with paint. Therefore, the increase in turmoil in financial markets, various types of collapse, inflation and other such phenomena are a natural consequence of departing from what, regardless of the market situation, will always have its value - it is physical investment gold. Alan Greenspan - former Chairman of the Federal Reserve Board of Governors - once said: "In an extreme situation, fiat money is not accepted by anyone and gold is always accepted as a lasl resort."
Although the gold-based monetary system has been replaced by that based on paper money, we still have the option of having physical investment gold.Investment gold is the best way to protect capitalin the face of all sorts of political and geopolitical conflicts. Investment gold is also an answer to the question of how to protect capital against inflation and uncertainty on financial markets. Moreover, the indisputable advantage of investment gold compared to other assets is that it is not subject to VAT. Investing in stock gold is also not a complicated matter - one of the main tasks of the investor is to follow the changes taking place on only two charts, i.e. the US dollar and the current gold price. All this makes it worth investing in investment gold.
Investing in Gold Bullion: is that the ultimate safe haven?
The current economic situation, led by the constantly growing public debt, directs investors' attention towards assets that will secure capital in the long term. After all, it has been known for a long time that failure to reduce public debt leads to central banks keeping interest rates at a low level, thus favoring growth in the investment gold market.
This unique feature is related to the fact that you want gold in relation to an institution that is significant to the institution that does not relate to other investment schemes, such as mining costs.If we want to represent the portfolio in advance, it is worth approximately 5% -20% space for the deposit in it.
The above estimates refer to situations where the markets are relatively calm. In times of various crises or turmoil in financial markets, it is worth reducing investment in other assets in favor of investment gold.
Gold as a hedge against inflation. Is that still true?
People used to say that stock gold is an excellent hedge against inflation. History has proven the truth of this statement more than once, so the search for further evidence may be deemed unnecessary - after all, history likes to repeat itself. Hardly anyone realizes, however, that investing in investment gold is also a great way to protect capital against deflation. As Krishan Gopaul, Analyst at the World Gold Council rightly pointed out, a deflationary environment creates financial stress among investors, which in turn pushes them towards physical investment gold.
Given that gold is priced in US currency, a depreciation of the USD is synonymous with an appreciation of gold. What does this mean in practice? When the value of the US dollar declines, holders of other currencies have the opportunity to pay correspondingly less for the physical ore. In the event of a crash in the financial markets and an uncontrolled depreciation of the US dollar, gold for the vast majority of investors would become a place of refuge, a safe haven.
Locate capital in physical investment gold
Now that we've covered the most important issues regarding the gold market, it's time to get to the bottom line - which gold investment products are worth choosing?At the very beginning, we immediately exclude jewelry, numismatic items and other products where aesthetic values or collector's value are the most important. If we decide to invest in investment gold, first of all, we should pay attention to the sample, i.e. the percentage of gold in a given product, and a number of other factors.
In the case of typical gold investment products, there are two types to choose from: bars and bullion coins. Regardless of the object of interest, first of all, attention should be paid to the manufacturer responsible for the production of a given product. The best solution is, of course, to buy an investment product that comes from a proven source, i.e. it was produced by one of the world-famous mints.
Gold bars as a way of investment in gold
When it comes to gold bars, we especially recommend the products of the Swiss mints Valcambi and PAMP. Our offer includes a whole range of investment gold in the form of bars - we have products weighing from 1 gram to 1 kilogram. Tavex, as one of the few sellers of investment gold in Poland, can boast of direct partner relations with the producers of the aforementioned products. Thanks to this, when you decide to cooperate with us, you can be sure that you are choosing the highest quality at the best price!
Bullion coins as an example of investment in physical gold
When browsing the offer of gold coins, it is worth focusing on those that are popular all over the world and - as in the case of gold bars - have been produced by the largest mints in the world, with LBMA accreditation. The most popular bullion coins are, without a doubt, the Australian Gold Kangaroo, the Golden Vienna Philharmonic, the Golden Canadian Maple Leaf, the South African Krugerrand and the Golden American Eagle. Gold bullion coins will be a great solution for investors who are not only looking for a way to safely invest their capital, but are also extremely sensitive to various types of art. Bullion investment coins made of gold are characterized by the highest care for every, even the smallest detail, unique design and patterns and exceptional aesthetics of technique.
What to choose for an investment in stock gold? Bars or coins, that is the question
The main advantage of gold bullion bars over gold bullion coins is the favorable price per gram of gold. This is due to the fact that the production costs of bars are slightly lower than the costs of producing coins. Why is that? Gold bars are characterized by the simplicity of production. We can easily find basic information about the manufacturer, fineness, weight or serial number on them.
On the other hand, more expensive in production – gold coins are reflected precisely in the unique and carefully crafted designs. Importantly, the coins have a face value stamped, so as a last resort they can be used as ordinary means of payment, which cannot be said about bars. Each of them has its pros and cons.
Taking all this into consideration, you might think that buying coins is more favourable than bars and it would be paying off much more. However, deciding whether to invest your capital in bullion bars or coins does not really matter - in both cases it will be an equally good choice! Investment in stock gold is still profitable!