Gold as an Investment: Built to Last, or Cash in Now?

 

For new investors or those who already own a certain amount of gold, the question of whether it is worth holding onto as an investment or to cash it in becomes a common concern.

Gold has held an important place in the world’s economies for thousands of years. It is valued not only for its monetary worth but also for its aesthetic appeal. It’s no mystery why people attach sentimental value to this precious metal.

While some see investing in gold as an outdated practice that ought to be replaced by a more modern equivalent, many still see gold as a necessary investment; especially for those looking to diversify their investment portfolios.

So how is gold doing in our present economy? Is it still considered a good investment or should investors look into other investment vehicles to diversify?

Benefits of Investing in Gold

Gold has proven valuable as protection against inflation, declining currencies, and as insurance during economic and political turmoil. Many financial experts would advise the average investor to invest at least 5% of their assets to gold for diversification.

Different forms of Gold

Gold bullion coins

While there are certainly many benefits to investing in gold, especially for the long-term, the value of your investment will depend greatly on the type of investment you choose. Gold bullion coins are perhaps the safest and easiest to acquire, because they can be purchased at most central banks and can be sold quickly when necessary.

Gold jewelry

Of all the types of gold investments, perhaps the most appealing to the novice investor is gold jewelry. Gold jewelry is not a good investment. Jewelry has very high markup and its price is largely determined by the labor put into making them – not the base value of the gold and gemstones it’s made with.

Gold bullion/bars in vaults

Gold that is stored in high security professional vaults is a cost-efficient  investment option as it solves the problem of finding a safe storage for your gold and is much more liquid as you no longer need to prove its purity once you decide to sell. Gold in this form is also bought at the lowest markup since you no longer have to transact in smaller quantities with gold dealers.

Gold in the form of bullion bars and coins is a good investment in the long run but gold jewelry, while pretty, has poor resale value. Unless it can be classified as an antique or is incredibly rare, it will not go up in value and would be better suited as something to pass on in an inheritance if it carries sentimental value.

The price of gold has dropped quite dramatically in 2015 because of the strengthening US dollar. The outlook for 2016 is not looking so positive either but it is worth remembering that gold prices have always been cyclical throughout history and is likely to go up eventually. If you’ve got some gold, cashing it in now or in the near future would be the way to go.

If you have some old gold jewelry lying around that you don’t use anymore, you can turn jewelry into cash and invest in other vehicles that would give you higher returns in the future.


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