The Pros and Cons of Investing in Gold

Unlike today’s currencies, gold as both an investment and a currency has spanned a course of thousands of years, making gold one of the longest-known sources of wealth. Today, gold is no longer a typical form of currency, but it’s values haven’t diminished—in fact, they continue to trend upward.

Many investors regard gold as a favorable addition to portfolios, but some—especially those who have little to no experience investing in gold—regard investments in the precious metal as impractical.

Gold certainly has a long list of positive attributes that safeguard and grow any investor’s portfolio, but there are a few cons to watch out for, too. Follow along for three pros and three cons of investing in gold.


Pros of Investing in Gold

Deflation and Inflation Insurance

Investors praise gold and often flock to it in droves during periods of economic uncertainty. It has been accurately observed that gold spikes when dollars drop, and investors return to the precious metal because of its enduring reliability. Besides a deflation hedge, gold tends to rise in valuation during times of inflation, helping investors to maintain buying power.

Supply and Demand

Gold is a limited resource, and this quality makes it even more valuable for investors. Since the dawn of gold weaving its way into currency, it has become harder to pinpoint gold deposits, and extraction costs are rather high. During the past two decades, new gold discoveries have slowed dramatically and though there are still many new gold veins found across the globe, uncovering large deposits has become progressively scarce.

Diversification

Smart investors don’t bet on a single form of investment. It’s agreed that no portfolio should wholly encompass gold alone, but gold is a balanced addition to other investment sources such as real estate, stocks, and bonds, and gold typically grows when any of the three take a plunge.


Cons of Investing in Gold

Transactions Wares

In rare cases, authenticity can be a problem in the gold sphere. When you choose to invest in gold, it’s important to work with certified dealers and confirm you’re acquiring real gold. And when you sell gold, there may be some paperwork involved to prove your ownership.

Volatility

Even as a powerful inflation and deflation hedge, when economies are doing well, gold can bounce around significantly. In 1980, gold rose 2,346% to $800 per troy oz, only to drop down to $474 the same year.

Storing Gold

Gold, unlike digital money, may be seen as an arduous investment as large or small amounts of gold needs to be stored in a safe place. Investors must plan where to store their gold for safekeeping.


So should I Invest in Gold?

Gold’s performance over time displays measured success, but investing in gold depends upon individual circumstances. Find out more about purchasing gold or gold as an investment with Jaggards, Australia’s leading dealer of gold bullion and rare coins.