3 Things to Consider While Investing in Physical Gold


Gold is one of the precious metals that has served as a form of currency and investment for a major part of history. This is because of its several significant characteristics; it is sparse, lustrous, durable, divisible into smaller pieces, easily hidden, stored and transported. Ancient civilisations and societies used the metal as a currency as it doesn’t corrode or react with other chemicals easily. It has been highly regarded as a safe haven to fall back on during economic or political instability periods. In the case of investments, usually, when the stock market tumbles down, the price of the metal shoots up. As gold is not affected by stocks in the same way as others, many investors use it as a diversification instrument.

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Investing in Physical Gold

People can invest in the metal in many ways, like through ETFs, Mutual Funds, digital means, mining companies, jewellery and of course, the traditional way of buying the physical form. Buying the metal as an asset is a straightforward option of directly owning it oneself, i.e., having tangible ownership. The quality and the purity of the metal matters more than the form. People can buy bars, coins or bullions from numerous dealers and online dealers. Some dealers also provide storage services to safeguard the metal; otherwise, it can be stored in a safe deposit box.  

Gold bullion is a bulk quantity of the metal sold by major dealers or banks, in the form of bars, coins or ingots by the measure of weight. Bullion is the best and the most efficient way of investing in the physical metal as it cuts any excess cost that goes into processing, like for jewellery. It is essential to research and investigate the investment before deciding on buying bullion. These are some of the things that must be checked out before deciding on the investment:

Check the Cost per Gram and Buy Back Terms

One of the first things to keep in mind is to keep up with the changing market value of the metal and the current price. This can be checked on trustworthy sites, and comparisons can be made to understand the variability and volatility offered by different companies. This difference usually comes from the various associations, although, in general, bullion have similar rates.

Also, it is recommended to check the buy-back terms from the dealer to find out how much cost one would retrieve if they choose to resell or exchange it. Collecting a testified certification, including all the charges and terms, is a must.

Purity Level of the yellow metal

The metal is available in varying purity levels, which affects its appearance, quality, and hence the price. For example, 24K 100% gold is the purest form there is. However, it is malleable. Therefore, bars and coins are usually a mix of pure gold with another one. The type of metal that the yellow metal is merged with also determines its value.

Understand the Working of the Investment

It is essential to realise that bullion investment does not generate an income when stored in a safe box like how other forms of investments do. It does not create interests or dividends when it is deposited but only provides gains when it is sold. Due to the sudden changes in the prices, it is best to hold on to it for a long time before looking for significant gains. This is one of the reasons why the precious metal is not subject to income tax.

Due to the ever-increasing trends in its value, investors recommend investing in gold for at least ten to fifteen per cent of one’s total investment to diversify the portfolio.