Can You Buy Gold as an Investment?

Investing in gold is often seen as a safe haven for investors looking for stability during times of economic uncertainty. Learn about the different ways to invest in gold and the risks associated with trading these types of products.

Can You Buy Gold as an Investment?

Investors have many reasons to invest in gold, and there are numerous methods to make those investments. From physical gold in the form of jewelry, bullion, and coins, to buying shares in a gold mining company or other gold-related investment, or even something that derives its value from gold, each method has its own advantages and disadvantages. Gold is often considered a safe haven investment, as it quickly recovers its value through economic shocks and its price often remains in opposition to stock market or economy swings. However, investing in gold and other precious metals carries risks, including the risk of loss.

If you are buying gold for your retirement account, you must use a broker to buy and a custodian to keep your gold. Throughout history, few investments have rivaled gold in popularity as a hedge against almost any kind of problem, from inflation to economic turmoil to currency fluctuations and war. Investing in gold ETFs and mutual funds can provide you with exposure to gold's long-term stability, while offering more liquidity than physical gold and more diversification than individual gold stocks. Alternatives to investing in gold include buying shares in gold mining companies or gold exchange-traded funds (ETFs).

Gold futures are more liquid than physical gold and have no management fees, although brokerages may charge a trading fee (also called a commission) per contract. If you don't want the hassle of owning physical gold or dealing with the margin requirements and fast pace of the futures market, then a great alternative is to buy an exchange-traded fund (ETF) that tracks commodity. Therefore, gold ETFs are more liquid than physical gold, and you can trade them from the comfort of your own home. As a result, whenever there is news that hints at some kind of global economic uncertainty, investors often buy gold as a safe haven.

However, as part of a diversified portfolio, it is recommended to limit the percentage of gold in your portfolio to 5% to 10% of the total account value. If you're concerned about inflation and other calamities, gold can offer you a safe haven to invest.

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