A Buying Guide: Is Gold a Good Investment?
Gold is a treasure—literally and figuratively. Whether it’s a coin, jewelry, art, or even an Olympic medal, anything made of gold carries a great deal of value with it. Gold has an attractive, luxurious quality and feel that tells you it’s something really special. Simply put, gold is golden.
Besides the glitter of this shiny metal, gold has been around for ages. Ancient civilizations used it as a form of money, exchanging it for goods and services. Gold also had other uses at the time, from decorating objects and buildings to making jewelry.
Today, the allure and worth of gold still ring true. With its steep price tag, gold can be a lucrative asset that you’ll want to invest in. Gold is one of the safest investment options you have because of its capacity to recover quickly even through difficult economic times.
In the following infographic, we will trace the history, value, and uses of gold to give you an idea of what to expect from your gold investments.
A Buying Guide: Is Gold a Good Investment?
Whenever we want to reference something good, we often use the word “golden” or “gold.” A golden opportunity. A heart of gold. The golden rule. A gold mine of information. These expressions only mean one thing: gold is the ultimate standard in describing something of high quality or value.
Gold has a long history, dating back to when ancient civilizations used gold to make jewelry, vases, vessels, shrines, and structures. Gold symbolized beauty and power, so it was common for rulers to send workers and slaves to mining sites to search for gold.
Gold was also used in international trade, which made countries rich in gold like Egypt. With this concept of money, gold became a precious commodity with a high value.
Today, the value of gold is recognized around the world and across industries. Some of its top uses include:
- Investments. The price of gold remains steady whether the economy is doing great or not since it has an excellent store of value. Gold is a viable alternative to physical money, which can lose its value when inflation hits.
- Jewelry. Gold is a versatile metal that can be easily formed into jewelry of all shapes, designs, and sizes. In India, people believe that wearing gold helps them attract financial blessings.
- Electronics. Electronic devices like mobile phones, TV, and computers are equipped with gold memory chips because gold is an excellent conductor and transmitter of information.
- Medals and awards. Gold is often used to award winners in just about any form of competition because it symbolizes prestige. Religious objects, from crosses to altars and shrines, are also adorned with gold.
- Engineering and aerospace. These industries rely on the metal’s unique properties to stabilize the temperature inside buildings and space crafts using gold plates or coatings.
Gold vs. Paper Currency
While it’s nice to have a flourishing bank account with your cash savings, there are many ways you can gain more value when you turn to gold investments. Unlike paper currency, gold offers more security and growth potential.
For one, gold is more efficient than cash in preserving wealth. When interest rates are low, your money in the bank doesn’t earn much. Due to inflation, it may not even have enough value to buy essential goods and services, whereas gold tends to rise in value when currencies weaken.
As such, gold can be your safety net during economic uncertainties. As long as you hold gold, you won’t be seriously affected by rising inflation rates, and you’ll have assets that you can turn into cash.
You can also diversify your investments and manage risks better by adding gold into your portfolio compared to only cash or paper money.
Types of Gold Investments
Take a look at the different ways you can invest in gold:
Many people prefer to invest in gold jewelry, which is why about 49% of the global gold production and consumption goes to jewelry making. Besides being a valuable possession, gold jewelry does not rust and is appreciated for the beauty it gives to the wearer.
Pro tip: Buy from jewelry auctions to find valuable pieces at marked-down prices.
Gold bullion is pure gold, making it popular among gold investors. Gold bullion can come in coins or bars that are issued a serial number, just like paper money. Gold coins and bars vary in size and weight, which can affect their price as well as liquidity.
In this type of investment, you purchase shares from a gold mining company without buying physical gold. So even if gold prices rise, it doesn’t necessarily mean that share prices will also be upgraded. Other factors determine share prices, including the gold mining company’s performance, environmental risks, and other relevant considerations.
Gold exchange-traded funds are traded on major stock exchanges. When you buy shares of a fund, your investment carries a fixed amount of gold—i.e., one-tenth of an ounce of gold. Investment is minimal, as you can buy a single ETF share. However, not all ETFs hold physical gold as there are those that trade derivatives of gold.
Gold and Taxes
Taxes for gold depend on which country the gold is produced, bought, or sold. In many cases, value-added tax (VAT) and goods and services tax (GST) are not applied. However, physical gold collectibles in any form—coins, bars, rare coins, and ingots—are subject to capital gains tax.
This tax is collected when you make a profit by selling this investment. Always do your due diligence by checking local tax rules before making any gold investment decisions.
How to Store Your Gold Safely
Needless to mention, you need a safe place to store gold. You can choose whether to keep it on your property, in a safe deposit box at your bank, or a private firm’s gold depository. Consider the pros and cons of each storage option.
For instance, keeping it in your possession may be risky, but then again, you can always have access to it anytime you want to move it. On the other hand, banks and depositories offer insurance to protect your precious gold.
Go for Gold
Then and now, the intrinsic value of gold makes it appealing to those who fancy beauty and glory. That universal appeal also paved the way for gold to be a worthy investment. In times of financial hardships and emergencies when you need extra cash, you can use your gold jewelry as a pawnable item.
Pawnhero is a leading pawnshop in the Philippines that accepts gold jewelry in exchange for a cash loan. Get a free estimate for your gold jewelry now!