Whenever circumstances become rough, the stock market takes a blow. It's the same thing for currencies such as the dollar, which are based on trust in government. When people start to become worried about their safety, the purchasing power of their home currency starts becoming devalued.
That's when everyone turns to stable assets such as gold. That's especially true nowadays because inflation levels are on a record high. Precious metals such as gold and silver serve as excellent alternatives to the traditional assets we're all used for. You can go to this page to read more.
However, you should look at precious metals with a different mentality. For example, you know that investing in the S&P 500 will bring you a 10 percent increase in your initial investment every year. That's roughly the rate at which it has been moving for a couple of decades.
Also, having a number of rental properties is an asset class where you can expect to receive rent on your bank account or on hand, depending on the type of deal you have with your tenants. Bonds fall into the same category, but the earnings are much lower than the first two.
When you compare all of these investment strategies, gold seems like a bummer. You just buy a brick that weighs a kilo made of pure gold, and it stays locked up in a safe. There are no dividends, no increase in the amount of gold, and there are high costs to keep it locked up.
Then what's the whole point of buying it in the first place? The main point here is that it should be thought of as a store of value. It's a cash-neutral asset which means that it's something that transfers value through time.
The entire market around gold can change, and it's not going to be harmed by it. Sure, there are bull cycles in the world of precious metals, but they're not as drastic as a stock market crash, like what happened in 2008. There are a couple of ways in which you can buy it.
Getting the real deal
There's no better feeling than holding bullion in your hand. A lot of people love the sound that the ATM makes when they're getting their paycheck. You can visit https://www.metal-res.com/gold-ira/what-is-the-safest-way-to-buy-gold/ to read more. It's pleasing to hear the whirl of money inside the machine before you take it.
You always associate it with positive memories and imagination of what you can buy with it. However, holding bullion is a completely different feeling. It's shiny, and there are more than 5000 years of tradition behind that piece of metal.
Ancient kingdoms have fought over it, and it's been remade to be a part of modern life again. There's a specific sound that it makes when you hit it with another metal, and that's one of the most emotionally fulfilling ways to enjoy your wealth.
The disadvantages come when you own a lot more than single bullion. One of the most significant disadvantages is the requirement to protect it and insure it. It leaves you completely reliant on the increase in price in order to make a profit.
That's not so bad because the price of gold increases linearly over time. It all depends on how much time you can wait. Shares in a company might be something that brings a bigger return on investment because they can strike a mine that is filled with raw materials. The biggest risk here is that someone can come to your house and steal it.
This is especially important to keep in mind if you plan to safeguard it yourself. When it comes to buying it, you can do it by going to a local vendor, or you can order it online. Check the spot price before you do so to make sure that you're not overpaying.
Futures
Futures are a fantastic opportunity if you are a trader. If you're good at speculating whether something is going to happen in the world, then this is something that will bring you massive profits. This option is great for people who know a lot about the geopolitical state of the world.
Sometimes, a strike in a mining company in India can result in a 5 percent decrease in the price of gold or silver. For this reason, you need to have a lot of experience in the market, and knowledge, to use the available leverage.
With a modest quantity of money, you can possess a large number of futures and make money rapidly. But there's also the chance to lose all of it if you make a lot of mistakes. It works as a sword with two blades, and it's something that skilled investors should take a look at.
ETF
If you don't want to deal with the hassle of the previous options, then an ETF would be perfect. There's no trouble with owning gold for yourself, and you don't have to deal with the quick speed and margin needs when it comes to dealing with futures.
ETFs are a commodity that everyone can enjoy. The purpose of an exchange-traded fund is to mimic the price of gold on the market. The rates for using one are quite low, and there are a lot of advantages. You can exchange your position on the market at any time. That's not possible if you have a large quantity of bullion in your home. This makes it the most liquid position out of all.