This is a guest post from BullionVault
Even after a decade-long bull market, many people look upon the idea of buying gold as a bit strange, almost like something from the past. We see advertisements and companies advertising “Buy Gold” arrangements, yet it is rarely explained what exactly the benefits of purchasing gold stock can actually be.
Indeed, those who do buy gold often trade it as they would any normal, publicly traded stock – seeing as the prices of gold rise and fall much like a regular stock. So, what exactly is the benefit of investing your money in actual gold? Well, it depends upon your personal preferences and style of investment – however, there are certain potential benefits that may intrigue you.
To begin with, there are companies, such as Bullion Vault, that allow you to buy and store “Good Delivery” gold (*) with extreme convenience and simplicity. You can conduct the entire process online, and can buy any amount of gold, at any time, and it will be stored securely in a top class vault somewhere in the world. Additionally, these companies offer very low rates for storing your investments and keeping them safe, with the result that you get most possible out of your investment when you do decide to withdraw your gains. This makes buying gold an extremely sensible and convenient way of, essentially, trading stock.
(*) note from 101C: Good Delivery is a quality term used by the LBMA, the London Bullion Market Association. It sets out basic size and purity specifications that a gold or silver bar must meet in a wholesale market: minimum fineness (.995), recommended dimensions, year of manufacture, manufacturer’s mark, etc. Remember the gold bar the character Zeus Carver used to bust out a car window in Die Hard With a Vengeance? That was a Good Delivery bar. More Die Hard trivia: all those supposed billions and billions of gold stolen from the Fed wouldn’t have fit that in those few trucks. That’s a typical Hollywood suspension of the real physical world. More trivia (or speculation): the gold stored at Fort Knox isn’t purported to be Good Delivery bars, as many were made from melted gold coins during the Roosevelt years. Gold coins, as we know, are often an alloy of gold and some copper.
Gold is also considered, by those who have begun to use it as an investment tool, to be a very safe place to put your money. In fact, some go as far as to call buying gold a type of insurance. It is certainly interesting to contrast money placed in gold with money placed in typical stocks, which can, and indeed almost always are, more volatile. While the prices and worth of gold do ebb and flow with time, they are not susceptible to emergencies or poor financial reports, etc. This means that while money you place in other investments may not be reliable if needed in the event of an emergency, any value that you place in gold can generally be relied upon. This makes gold investment a decent insurance policy in and of itself.
Ultimately, of course, investment strategies are tailored to fit individual needs . However, gold is one option that one should certainly keep in mind, only because many are inclined to automatically dismiss this resource as a odd sort of investment — a “barbarous relic”, as John Maynard Keynes is famously quoted. Conventional investments such as stocks and bond mutual funds or ETFs are and should be part of individual investment portfolios. But storing a part of one’s wealth in physical gold can be actually be a very sensible economic decision, and as noted above there are resources and services online that make these investments very simple and convenient.
Closing note from 101C: I might quibble a bit with the definition of “investment” for holding gold, inasmuch as holding cash is a type of investment. To me, precious metals are just a type of savings. Maybe that comes from having lived overseas and seeing how other peoples and nationalities regard a few gold pieces of jewelry or gold coins, as *savings*. Our small stash of physical gold and silver coins and gold jewelry is something we’ll hopefully never have to use, and probably pass on to our kids.