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Gold is not only a valuable metal but also considered as one of the safest investment options. It not only gives you profit but is also a highly liquid asset. Meaning you can sell it at a fair price when you need money.
There are many reasons for investing in gold. Read the pros and cons of investing in gold to make the right decision.
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Pros & Cons of Investing in Gold
PROS
There are plenty of advantages to buying gold. Some of them are unique, which you can hardly get from any other investment. The following are some pros of investing in gold that may be beneficial for you.
It’s a Tangible Asset
These elements are a great investment and tangible assets. Physical metals don’t get damaged by water, fire, or even time. They are also not like commodities, as you don’t need to fertilize, feed, or maintain them.
Gives you Profit
Yes, people consider precious metals as defensive assets, but you can also earn profit from them. When the business world experiences an economic crisis, gold prices naturally become higher to serve you when other assets are not. This is why gold is an excellent investment to survive through tough financial situations.
Can’t Be Erased or Hacked
Do you have shares in a stock or some investment in digital form, like cryptocurrency? What if someone hacks your account or steals your data? You need not worry about such mishaps when investing in gold.
They don’t get erased or hacked; however, you must keep your gold coins/bars in a safe.
Takes Less Space to Store
Okay, this is an exceptionally wonderful feature of gold, which you can’t find in any other investment. You can hold $60,000 of gold coins in your hand. They need pretty less space and don’t need a big locker to store them like dollar bills.
Can Be Confidential and Private
Are you searching for an investment that no one can know about? In that case, physical metals like gold are great for you. They offer you little confidentiality and privacy. Physical metals are one of the few investable assets that help you in this way.
Require No Expert Knowledge
Investing in gold doesn’t require specialized training or skills to purchase them, although working with a reputable broker that has experience in Gold trading is always a plus. You need not have the marketing knowledge or mathematical skills to invest in assets like gold.
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CONS
Like any other investment field, gold also has some drawbacks. Let’s learn what they are.
Needs More Money for Investment
Like any other virtual investment, you need to also pay for the commission for buying gold. Not to mention, these commissions are pretty higher than you have to pay for bond or stock. The prices of this precious metal also fluctuate according to the market conditions and the dealer.
However, online dealers are mostly not as costly as your local gold shop. Sometimes they also don’t take shipping fees from you. Furthermore, premiums on numismatic or coin are usually higher because they are collectibles. If you don’t want to become a collector, it’s best to avoid these products.
Have Safety Problems
When you invest in the gold, you need to think of its storage. However, you don’t need to worry about storing investment with bonds or stock. You need to think about the best place to store your physical metal to keep it safe from the theft.
If you use a safe deposit box or storage facility, you will have to pay a fee. Moreover, if you purchase a bullion-baked ETF, you also need to pay for the commission. But the fee is not you can’t afford if you have gold; the largest bullion ETF, GLD, asks you to pay around 0.40% annually.
Takes Time to Become Liquid
Having physical metal in your hands does not mean you can convert them into cash immediately. Of course, you can’t buy a new car or groceries with your silver bars or gold coins. Firstly, you need to convert them into your homeland currency.
Needs to Pay Taxes
You might be thinking that it’s not true, but sadly, it is. IRS takes silver and gold bullion as collectibles. This means a person who has this type of investment for one year need to pay 28% capital gains tax.
Bottom Line
Every investment has its own drawbacks. The same goes for gold, but its advantages outweigh the cons. This is why you should invest in gold.
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