If you're finding yourself constantly checking financial news and asset prices throughout the day, it could be a sign of nerves. That's understandable. Many investors are jittery right now, given the uncertainty in the market.
So what is your next step? How can you ease some of those nerves? Gold could be the solution, and in this guide, we'll explain why.
Read our Labor Day investment tips and why gold bars are the best choice for your money this September.
Why Investors Consider Gold a Safe Haven
If you talk in investor circles, you'll find many comments about gold being a safe haven. Is this true, and if so, why? Let's examine the facts.
The Value of Gold: a Historical Take
Looking at the history of any asset is vital for an investor, and doing so with gold will tell you why it's favored as a safe choice. Gold has historically maintained its value and weathered economic storms that have struck other assets like stocks or currencies. Gold often operates independently of stocks or economic activity, so if you look at any economic chart over time, you'll see it doesn't align with recessions. That decoupling makes it a vital hedge when choosing a stable option for your investment portfolio.
Gold as a Tangible Asset
Some assets, like derivatives, can be complex and abstract, and many are intangible.
In contrast, you can hold a gold bar in your hands. It's simple to understand as a commodity, and the physical aspect also makes it uniquely safe. You can't hack someone who is holding onto a gold bar.
Gold: Historical Prices
Gold prices have a fascinating history. Here are some of the key highlights from past years to help you understand more about the price and why gold remains popular with investors.
The 1970s
In the 1970s, currencies like the dollar had ties to gold under the remnants of the Bretton Woods system, also known as the gold exchange standard.
However, in the early 1970s, the U.S. abandoned the relationship between the dollar and gold. When that happened, U.S. prices soared for the rest of that decade, partly because of inflation.
1980s and 1990s
This period saw the gold price fall and stabilize. That reflected an era of economic growth in the U.S. and overseas, marked by lower inflation compared to the 1970s.
2000s
The first decade of the 21st century saw a revival in the price of gold. Two economic events triggered this rise in demand: the dot com bubble that burst at the start of the decade and the massive financial crisis in 2008.
2010s - Present
The early part of this era saw a slump in the price of gold, followed by a rapid rise. It has followed patterns seen in early decades, where worldwide uncertainties like COVID-19 have led to a rising demand for gold.
How to Buy Gold Bars
Purchasing gold has never been easier, thanks to the easy buying arrangements we've created at the U.S. Gold Bureau. Here's how you can buy gold:
1. Choose Your Preferred Option
On the website, you'll find a range of gold options, including coins, bars, and various weights, starting as low as one gram.
That means it's perfect for any investor who wants to get started but has a limited budget. It's also ideal for gold investors who want to add to their collection.
2. Store Checkout
We've modeled our buying process on any other eCommerce platform, so it's familiar and straightforward. Using our secure checkout, you'll complete your payment and delivery or storage options.
3. Delivery or Storage
You have the option of using secure storage for your new gold asset. The U.S. Gold Bureau uses the highly secure facility at the Texas Bullion Depository. You also get insurance to have complete peace of mind that your gold asset remains in safe hands.
Gold Bars Vs. Gold Coins
Whether you choose bars or coins will primarily depend on your investment level. Gold bars are heavier and thus more expensive since gold is priced by the gram or ounce.
Gold bars are preferable for those who want a reliable, long-term investment. Nevertheless, gold coins tend to have more liquidity, which means more flexibility with your investment. Some people also collect gold coins for their historical significance.
Gold Investment and Portfolio Diversification
Seasoned investors understand the importance of diversification. This term refers to hedging your bets by investing in different types of assets so that if one sees a decline, it is unlikely to impact the others. Here's what you need to know about gold portfolio benefits and diversification. Diversification is about managing your risks, but to do that effectively, you need assets that don't correlate with one another.
That can be challenging for some investments, like stocks because while each has ups and downs, a significant economic downturn is likely to see them all fall. Conversely, gold often moves in the opposite direction, making it the perfect asset to diversify your portfolio.
Inflation
Inflation has been high in the past few years, partly due to COVID-19 and partly due to rising energy prices worldwide. That's impacted everyone, down to the weekly grocery shop. Good assets hold their value and continue to appreciate during eras of high inflation. Gold is one of the best assets in that respect.
Liquidity
Liquid assets sell fast, and gold is always in demand. Selling is easy, and there are numerous channels to help you turn that gold into cash, including a selling option on our website. High liquidity is also crucial for managing your investment risks.
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Economic and Geopolitical Trends
As with any investment, you need to understand the market first. With gold, you must understand how this asset behaves based on economic indicators and global political events. Both shape the ups and downs of gold prices.
Monetary Policy
Central banks like the Federal Reserve influence gold prices through monetary policy decisions.
For example, when interest rates are low, gold is more attractive to savers because they won't get good returns on other traditionally safe assets like bonds. Since gold doesn't offer a yield but preserves value, it isn't impacted by those decisions, making it more appealing.
Recession Fears
Recession always looms large for investors, and you may have seen this recently with concerns about stock market dips or news on rising unemployment levels.
Other global factors impact economic uncertainty, too, including geopolitical events and trade wars. All this uncertainty leads investors to seek refuge in safer assets, which is why gold performs well when the rest of the market looks shaky.
When prices begin to rise, central banks will react with fiscal policies, which may impact supply chains. This global activity means that more investors will protect their money by putting it in gold.
Geopolitics
Economic activity and geopolitics are closely entwined.
Trade conflicts between the U.S. and China have made investors feel uncertain, as have wars in the Middle East and Ukraine. More global unrest will always begin to shape the domestic financial market.
Pandemics
COVID-19 may have been unprecedented in our lifetimes, but pandemics and epidemics always present a risk. It's evident how COVID-19 has impacted the global economy, causing supply chain disruption and almost stopping manufacturing.
Many central banks took stimulus measures to mitigate against the economic impact, which has led to higher inflation levels.
Technology
One interesting point about gold is that it has benefitted from advanced technology. Gold bars haven't traditionally been easy to buy, but that has changed in the internet era.
Now, anyone, whatever their background and connections, can buy gold online. That ease of access has helped the price rise by increasing demand.
Investing in Gold and Retirement Planning
Whether you have decades to go before retirement or that date is just around the corner, a few factors will shape your financial decision-making, including investments that offer diversity and safety. Here is why gold is the best fit.
The Stability of Gold
Gold has a track record for holding its value when you examine long-term historical prices. That's ideal for retirement investments, as you want to ensure you preserve your wealth for that time in your life when you need it.
It means that should you find yourself about to retire when an economic crisis happens - like a massive market crash - you'll weather the storm better than if you have all your money in more volatile assets.
Gold is the best way to diversify an existing retirement portfolio. You likely have retirement savings in stocks and bonds, so gold helps reduce that risk profile. It gives you peace of mind about your retirement savings. You can make gold a one-off purchase for your retirement funds or choose a longer-term investment plan, like ongoing gold purchases each year, to align with other retirement investments you make. It's worth getting some tax advice to see if your investment has any tax advantages.
Remember that gold is more liquid than other retirement assets you may own, so offering diversification will also ensure you have better access to your money. So if circumstances change, such as facing a sizeable medical bill, that asset will turn into cash before you reach retirement age.
How to Make the Best Gold Investments
You should always do your due diligence before making any sizeable investment.
Choosing a trusted source like the U.S. Gold Bureau is crucial when buying gold. Otherwise, you could risk purchasing gold bars that aren't authentic and, in the worst-case scenario, have been mixed with other metals.
Look for a supplier with the correct credentials. For example, at the U.S. Gold Bureau, we have credentials from:
- Crafted Precious Metals Dealer with the State of Texas
- Federal Trade Commission: Full regulatory compliance
- USA Patriot Act Anti-Money-Laundering Compliance
- Authorized Bulk Purchaser from the United States Mint
- NGC and PCGS Authorized Dealer
- Full state compliance and oversight on depository storage
You'll also need to ensure you can store your gold safely. Some people prefer to keep their gold at home in a high-quality safe. Nevertheless, keeping your gold in a trusted storage facility is worth considering.
At the U.S. Gold Bureau, we partner with the fully insured Texas Bullion Depository, which offers state-of-the-art security from a highly experienced team.
If you store gold at home in a safe, remember to arrange for the appropriate insurance on your investment. While theft may be your primary concern, you shouldn't forget that insurance covers you for other risks like natural disasters.
Labor Day: Is Now the Best Time to Invest in Gold?
If you're an experienced investor, you'll know that timing matters. So, is this year's Labor Day a good opportunity to expand your portfolio by investing in a gold bar? Let's look at the facts.
First, consider geopolitical tensions at the moment. Ongoing wars in Ukraine and the Middle East are causing nerves, and there is every chance either of these could escalate. There are also political tensions between the U.S. and China.
Added to this is the uncertainty surrounding this year's U.S. presidential election. As you may have discovered by now, geopolitical tensions and uncertainty tend to push up the price of gold. So, from that perspective, making your gold bar investment this Labor Day is a wise move. Likewise, we've recently seen volatility in the stock market, currencies, and cryptocurrencies.
Inflation and interest rates remain higher than they were a few years ago. And there is talk of a potential recession. So, from an economic perspective, all the indicators suggest that gold could continue to rise.
Labor Day Investment Tips: Why Gold Bars?
Labor Day, coming before the U.S. elections is the best time to make your move. If you have money you want to protect, mark this date in your calendar as your moment to move it into a gold asset.
Now that you've read our Labor Day investment tips and why gold bars are the best choice, it's time to take the next step. Begin by signing up for our free precious metals investor guide available at U.S. Gold Bureau, the trusted and safe way to invest in gold online.
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byUnited States Gold Bureau