Is Buying Gold a Better Investment than Stocks?

Investing in Gold: Is buying physical coins or stocks better? Learn more about investing in Gold and how it can help protect your portfolio.

Is Buying Gold a Better Investment than Stocks?

Gold has long been regarded as a store of lasting value and a protection against inflation. Historically, both stocks and bonds have outpaced the rise in the price of gold, on average. Gold stocks are usually more attractive to growth investors than to income investors, as they generally rise and fall with the price of gold. However, there are well-managed mining companies that are profitable even when the price of gold falls.

Increases in the price of gold often result in significant gains in the best gold stocks, and owners of gold shares typically get a much higher return on investment (ROI) than owners of physical gold. Investing in gold stocks, ETFs, or mutual funds is often the best way to expose yourself to gold in your portfolio. Many supporters of gold suggest that it is a good hedge against rising prices, but the facts do not support this statement. Gold is often a better hedge against a financial crisis than a hedge against inflation.

In times of crisis, gold prices tend to rise. However, this is not necessarily the case during periods of high inflation. If there is a financial crisis or a recession on the horizon, it would be wise to invest in gold. However, if the economy is in a period of high inflation, it would be prudent to wait.

Many proponents of gold claim that it is a good way to protect themselves from rising prices, but the facts refute this statement. In many cases, gold is a greater protection against financial calamity than against inflation. During times of crisis, gold prices tend to rise. However, this is not always the case when there is an increase in inflation.If a financial crisis or recession is in sight, investing in gold may be a sensible option.

However, if the economy is experiencing high inflation, it may be wise to wait. There are other ways to invest in gold without bringing home physical coins. By buying gold mining stocks, gold certificates or publicly traded products, for example, you can get the advantages of hedging gold against inflation without having to carry heavy coins or worry about where to keep them.When you buy physical gold to protect yourself from risk, you are usually only interested in the value of the metal, unlike collectible coins which can reach hundreds of dollars above the spot price. Buying gold shares exposes you to other risks, including changing currency values.

If you buy shares in a company rather than in a fund, the company's management and outlook could also influence its price.If gold rises but the company is poorly managed or runs out of land to extract its shares could fall. Gold stocks and other non-physical forms of gold also tend to change in value because they are easier to trade. If you lose all other stocks in a fall your gold should follow historical trends and rise in value preventing you from losing everything.There are also stocks of gold mining companies, gold futures contracts, gold-focused exchange-traded funds (ETFs), and other classic financial instruments available to safely invest in gold. In the event of a stock market crash or an apocalyptic event in which paper money becomes invaluable, gold can be used as currency to exchange items.If workers go on strike, the company is poorly managed or the mine doesn't produce any gold then your investment is at risk.

If you buy gold coins from people or anyone else you are not sure about first check their authenticity.Gold is also a paradise in times of inflation because it retains its value much better than currency-backed assets which can rise in price but fall in value. The history of gold in society began long before the ancient Egyptians who began to form jewels and religious artifacts.Despite its ancestral charm, investing in gold isn't always as heavy as movies and TV shows may have led you to believe. Investors consider it one of the safest investments recovering its value quickly through economic shocks.Pawnbrokers aren't known for their fair prices and if you sell your gold to a dealer you're likely to sell it below the spot price of gold. Whether you want a little protection in case the dollar loses some value to inflation or you think society is about to crack turning life into a Mad Max movie it might be appropriate to keep some gold.Gold stocks come in different forms but in all of them you have a piece of paper instead of a piece of metal.

If you don't want to mess with a precious metal IRA that requires storing physical gold then an ETF is a great option that usually mimics the price of gold.Molten bars are created in molds while minted bars are poured into long strips of metal and then cut into bars.

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