Are Gold Bars and Bullion a Good Investment?
A famous American politician was recently indicted on charges of taking bribes in exchange for doing political favors. We certainly have no comment on this case or on the innocence or guilt of the accused man, but what interested us was the fact that when his home was searched by FBI agents, they reportedly found gold bars that were worth about $100,000. They reportedly also found about $480,000 in cash.
That got us thinking about gold bars, also known as gold bullion. Are they a good investment? Investing in gold bars, like making any other investment, comes with its own set of pros and cons. It's important to consider these factors before deciding if gold bars are the right investment for you.
Pros of Investing in Gold Bars and Bullion
They are tangible assets - Gold bars are physical assets that you can hold and store. This can provide a sense of security and ownership that other forms of investments, like stocks or bonds, may not offer.
They are considered a hedge against inflation - Gold has historically been considered a store of value and a hedge against inflation. It tends to retain its value over time, which can protect your wealth in times of economic uncertainty.
They offer portfolio diversification - Adding gold to your investment portfolio can help diversify your holdings. This can reduce overall risk because gold's price movements often don’t correlate closely with the stock market.
They have relative liquidity - Gold bars are relatively easy to buy and sell. You can typically find buyers for gold bars through dealers, banks, or online platforms.
They can offer privacy - Unlike some other investments, owning physical gold bars can provide a degree of privacy. You might not need to report gold holdings to the government in the same way you might with other investments.
Cons of Investing in Gold Bars and Bullion
Bullion and bars can be hard to sell - Finding a buyer at the price you want can sometimes be challenging, especially for large bars.
Gold bars don’t generate income - Gold doesn't generate income like stocks or bonds do. It doesn't pay dividends or interest either, so you're relying solely on price appreciation.
It can be risky to own and store them - Owning physical gold bars comes with security risks. You need to protect them from theft and damage, which may require additional expenses for secure storage.
Storage and insurance costs can be high - Storing physical gold bars can be expensive, and you'll likely need insurance to protect your investment. This can eat into your potential returns.
Their value can change unexpectedly - Gold prices can be highly volatile. They can go up significantly during times of economic uncertainty but also experience significant downturns.
There could be tax implications - Depending on your location, there may be tax implications when buying or selling gold bars. It's essential to understand the tax laws in your jurisdiction.
They could be made of “dirty” gold – That is another way of saying that they could have been mined by miners who are underpaid in third-world countries, or that they could have been mined in ways that have caused environmental harm. You generally have no way of knowing.
What Gold Investments Are Better?
Ultimately, whether investing in gold bars is a good choice for you depends on your investment goals, risk tolerance, and the role you want gold to play in your portfolio. It's often recommended to consult with a financial advisor or do thorough research before making any investment decisions. Additionally, consider a balanced approach to investing, diversifying your portfolio across different asset classes to manage risk effectively.
At Specialty Metals Smelters and Refiners, we are bullish on investing in gold scrap, not bullion. Why? Simply because it is possible to buy certain kinds of gold scrap at reduced prices, then reclaim the gold they contain and sell it for a sizeable profit. Many kinds of gold scrap, ranging from gold and gold-plated jewelry, gold-filled eyeglass frames, gold dental appliances, and even gold dust and scrapings from jewelry factories are investments that can put a lot more money in your pocket – and faster – than bullion investments.
If you have gold scrap – or if you simply have questions about how to invest profitably in gold, give our precious metal refiners a call at 800-426-2344 or email sales@specialtymetals.com. And be sure to subscribe to our YouTube Channel.