A Guide to Physical Gold as an Investment (Updated 2023)

Gold has been a popular investment vehicle for thousands of years, and its appeal and attachment to wealth, power and success continue to this day. Whether you’re ready to add physical gold to your portfolio, or you’re just curious about the metal’s many benefits, this guide will provide an overview of gold as an investment asset and answer some common questions.

What are the Benefits of Investing in Physical Gold?

There are several key advantages to investing in physical gold:

1) Tangible Asset: Gold is a tangible asset that can be held or touched. With its allure and scarcity, it has held up its value since ancient times. It also offers portfolio diversity because it’s a different type of asset to stocks and bonds.

2) Store of Value: Gold is a dependable store of value. It generally holds its value regardless of fluctuations in currencies or the markets and can provide protection in turbulent markets.

3) History of Returns: Over the long-term, gold has outperformed banks, stocks, and bonds. Even at times of erratic market behavior, gold retains its value.

4) Portfolio Diversification: Gold can provide diversification to your portfolio and often acts as a hedge against market volatility.

5) Liquidity: Gold is highly liquid and can be quickly and easily sold for cash.

What are the Different Types of Physical Gold?

Physical gold comes in a variety of forms, each offering different benefits and risks.

Bullion Coins: Bullion coins are gold coins produced by government mints and are considered to be the most reliable type of physical gold investing. They bear a face value and are typically struck from 99.99 percent pure gold.

Bullion Bars: Bullion bars are rectangular ingots that come in a variety of sizes and weights. They are typically produced in 99.99 percent pure gold.

Collectible Coins: Collectible coins are special coins often produced with higher purity levels than bullion coins. They are often of limited availability and value, so they require more research and understanding of the coin market before investing.

Gold Jewelry: Gold jewelry can be an inexpensive and easy way to invest in the metal. However, many pieces are not composed of pure gold and often contain a variety of other materials.

What are the Costs of Investing in Physical Gold?

The costs associated with investing in physical gold include the purchase premium and storage costs. The purchase premium is the difference between the spot price and the price you pay for physical gold. Storage fees can include costs related to storing gold at a secure facility, although some investors prefer to store gold privately. Additionally, some dealers may charge premiums on buying and selling gold.

The Bottom Line

Physical gold has a long history as a store of value and safe haven asset. It can provide diversification and portfolio protection when markets are volatile. When investing in gold, it’s important to understand the different forms of available physical gold and the associated costs.