Advantages and disadvantages of investing in gold

You're thinking about investing in gold. With this in mind, considering the advantages and disadvantages of such a transaction can help to ensure you make an informed and reliable decision. So, what are the pros and cons of investing in gold?

Advantages of investing in gold

One of the top advantages of investing in gold is that it is easy to buy and sell, and you've got a variety of options to choose from. These include physical gold investments, such as gold bars, coins or jewellery, as well as non-physical sources, like exchange-traded funds or unit and investment trusts. By weighing up these different options, you can decide which type of gold investment is the right one for you.

People have been investing in gold for hundreds of years, and as one of the oldest investment options, if you're looking for a solution that boasts a long-standing history and a global platform, you can't go wrong with gold. With its worldwide recognition and acceptability, you can purchase or sell your gold investment anywhere in the world.

Another one of the main advantages of investing in gold is that it has proven to hold its value well, even during economic turbulence. For instance, during the financial crisis of 2008, gold increased in value by 5%, while stocks plummeted by 37%. In fact, gold is considered much less volatile compared to many other assets, and when the gold market is at a peak, it tends to stay high for a long period of time, making it a good option for preserving your wealth.

Crucially, owning and investing in gold can be much more satisfying than investing in other assets, and if you invest in gold jewellery, it even has practical uses if you decide you want to wear the item at some point in the future.

Because of the many options available to invest in gold, this makes it a flexible and versatile way to help preserve your wealth. Often, the best type of gold jewellery for investment purposes is plain and of a high caratage of around 21-24 carats.

Disadvantages of investing in gold

As with any investment, you can't always predict if you'll gain a long-term profit, and gold is no exception. Gold prices can drop, which is one of the disadvantages of investing in gold that you'll need to be aware of.

When investing in gold, you can't always be sure by looking at an item what it's worth, so there is always the risk that you could get ripped off, particularly if you buy online and can't view the gold in person prior to handing your money over. However, you can reduce the risk of fraudulence from occurring, and by ensuring you make a legitimate purchase, by choosing a high quality, respected gold retailer.

It's essential that you have an understanding of what you are buying when investing in gold, as it doesn't work in the same way as investing in company shares. It is more difficult to place a valuation on gold compared to assessing the worth of stocks and shares, as gold value tends to be determined by supply and demand. Therefore, there is an element of risk attached in terms of knowing if values will rise significantly in the future. If you purchase gold overseas, it may also be more difficult to verify the gold content of an item. Some gold jewellery items may also have their value linked to fashion trends rather than investment worth.

Bear in mind that when you purchase gold as an investment, the price you will pay will often include the seller's commission and other mark-up costs. To ensure you pay a fair price, do your research and get to know roughly what you should be paying for a particular gold item.

One of the main disadvantages of investing in gold is deciding what you are going to do with it after you've bought it, ie, you'll need to find a safe place to store it. If you invest in gold jewellery, this shouldn't take up too much space, however, but never compromise on security and always make sure the item is fully protected and insured.

Once you have weighed up the advantages and disadvantages of investing in gold, you can decide whether this option is right for you. If you go ahead and become a gold investor, choose a reputable seller that comes highly recommended. As with any investment, it's good to spread your portfolio options so that you don't put all your proverbial eggs in one basket. You can reap the advantages of investing in gold jewellery by choosing Albone Jewellers.