Of all the precious metals, gold has become the most popular for gold investments. Investors usually purchase gold as part of a diversified portfolio as part of a plan to protect against volatile markets and inflation. The gold market is also susceptible to volatility and speculative theorizing as are many other markets. However, gold has a higher intrinsic value than most other assets because its price is fixed once bought and cannot be changed by force of any kind.
There are three good ways of investing in gold: direct, gold stocks, and gold bars. All three methods have their advantages and disadvantages, depending on your circumstances. Direct gold investments may involve holding physical gold in a bank or a broker’s office. The risks of theft and the possibility of not getting the after-tax returns depend on the type of transaction you enter into.
Gold stocks are more attractive than gold investments in most cases, since the prices are more easily determined and manipulated. However, there are inherent risks like poor liquidity, company bankruptcy, limited trading hours, low profit margins, and limited choice of trading instruments. Finally, there are some gold mutual funds that are managed by professional financial investment managers who pay regular dividends to shareholders. These mutual funds are popular with investors due to their high profit potential and comparatively low costs.
Gold bars are another category of gold investments, which can be used for day-to-day personal transactions, or as a vehicle for storing your after-tax returns. You must always be prepared for physical theft if you store these in your house or anywhere else in your possession. They are also more difficult to deliver, so ideally you should keep them at a relatively secure place. Some gold bars are sold under the name “bartering coins” or “collectible coins”. Lucrative bartering transactions are made between collectors, manufacturers, and dealers, but buyers and sellers should never carry cash.
Precious metals are very easy to sell when you want to retire and benefit from higher gains. Generally, they are less taxed on sales than bullion coins and bars. However, you may have to pay capital gains tax on your gains. This is because gold investments are generally treated as sales by the authorities and are treated as income for the year of ownership. You may have to pay the tax even if you sell the gold within the period of time allowed by the rules, and even if you have been a non-domiciled citizen for over half a year.
A preferred stock market investment is also easy to sell, but it is quite hard to find a good buyer for a gold stock. You may make it easier by diversifying your portfolio. Precious metals will not perform well in a stock market where most companies are very much dependent on oil and other natural resources. Gold is not one of those natural resources. It does not matter if the price of oil or gold rises, it does not affect the value of gold.
Another advantage is that most people invest their money in the stock market, which means that they lose a part of the profits they make. By investing in gold ETFs, such people can enjoy gains, but they do not lose any of the money they have invested in the stock market. Therefore, gains are more comfortable in these cases. Moreover, the gains in gold etfs are more profitable when compared with other investments.
There is no question that gold can be an excellent investment. The only issue is that most people invest it incorrectly. Instead of using this article to learn the basics of gold investment, you should spend five minutes reading an expert’s opinion on this topic. After reading an expert’s opinion, you can start implementing an intelligent strategy. That way, you will enjoy excellent profits from your gold investments, regardless of the stock market or the price of gold.
