1. Gold Holds its Value
Unlike stock and commodities investments, gold tends to hold its value during market instabilities. Although all investments involve risks, gold is often considered a safe bet due to its ability to sustain market instabilities.
Gold prices are determined by the amount mined in a certain period. Thus, macroeconomic policies like interest rates and external public debt are unlikely to affect its stability. Nevertheless, new investors should be cautious, especially when selecting the time for investment.
2. The Difference Between Gold Stocks and Physical Gold
New investors must be aware of the type of gold investments they select. Many of them think that they are investing in physical gold while they might be investing in gold stocks. For instance, investing in a gold mining company involves buying gold stocks and not the physical metal.
Investors can make a profit by investing in either way. However, it is essential to conduct due diligence on the perfect time to invest.
Beginners in gold investments are vulnerable to scams and forged documents. It is crucial to understand that buying gold certificates doesn’t mean the actual holding of the gold. Certificates are only used as evidence for holding gold and they are easy to manipulate. Experts indicate that new investors should be vigilante for such scams and transact with reputable companies.
Experts indicate that the safest place to store precious metals is banks and safe deposit boxes. When opting for physical gold, investors need to think about the quantity, type, and storage costs.
Many people invest in precious metals since they have lower tax rates than other types of investments. However, investors should note that gold stocks attract a lower tax rate than physical gold. For instance, an increase in the value of gold coins and bars draw an increase in taxes. In the long-term, physical gold may disadvantage an investor due to higher taxes. Therefore, it is vital to seek financial advisory for specific situations.