Is Gold a Good Long Term Investment?

Gold stands out as a compelling alternative investment with the potential to yield substantial returns over various timeframes.

Its unique attribute of not being correlated with the stock market makes it particularly appealing to investors, offering the possibility of positive returns even during bearish market conditions.

Moreover, gold is universally acknowledged as a store of value. This characteristic enhances its utility, allowing it to be used for purchasing goods or providing liquidity during periods of global political instability.

Diversify Your Portfolio 

Perhaps the best reason to buy gold coins or bullion is that it allows you to diversify your portfolio. Diversification is key because it limits losses during periods of economic weakness. When the stock market is struggling, you may be able to defray some of your losses thanks to gains in gold and other sectors. 

An ETF is similar to a mutual fund in that you can gain exposure to many companies with a single investment. However, unlike a mutual fund, you can buy or sell your shares at any time like a stock without having to wait until the end of a trading day to liquidate your holdings. 

Gold Is a Finite Product

Unlike a fiat currency, gold cannot be printed or added to a digital ledger to add liquidity to a market. This is why it tends to hold its value during times of inflation or economic downturns. It is also the reason why it will retain its value in the aftermath of political upheaval.

Whereas a fiat currency relies on the confidence that people have in the government that issues it, gold is a known quantity that people trust as a store of value at all times. 

Gold Has Been in Demand for Millenia 

Gold has been a symbol of wealth throughout most of human history, and it is still seen as something that you need to have if you want to impress your friends or neighbors.

For example, if you want people to think that you have money, you wear a giant gold ring around your finger or a watch that is encrusted in gold. Wealthy individuals may also cover their cars, homes, or other items in this material to tell the world just how rich they are. 

This means that gold will almost certainly be in demand for the next several decades, centuries, or millennia. Ultimately, you can feel good that your gold portfolio will retain its value or continue to appreciate it for the duration of your lifetime. 

As gold is generally in high demand, you should have no problem liquidating your holdings at almost any time. However, you should know that you'll typically get the highest prices from private individual buyers as opposed to pawn shops or similar companies. This is because they have to buy at a discount to make a profit when the gold is resold. 

You Can Use Gold to Save for Retirement 

If you need more proof that gold has the potential to offer significant long-term returns, consider that you can invest in precious metal IRAs. An IRA is a retirement account that allows you to invest your savings in a tax-deferred manner.

However, you may have the ability to keep them in a safe deposit box at the local bank or credit union. It's also typically a good idea to have the gold titled in the name of your IRA to further show the IRS that a given coin or piece of bullion was acquired to save for retirement. 

You will also need to ensure that any gold coins or bullion that you purchase meet IRS guidelines for inclusion into an IRA. For instance, they must meet clarity and quality standards as well as come from a miner or refiner that is affiliated with NYMEX/COMEX. Most coins that are minted by American, Canadian, or Australian entities meet these characteristics. 

Gold Holdings Can Be Passed to Future Generations

If you want to secure your child's financial future, buying gold may help you do that. The gold coins or bullion that you buy can be passed onto your kids so that they have an asset to sell or borrow against if needed. You can also pass shares of gold company stocks or ETFs to your kids or grandkids so that they can start their lives out with a financial advantage. 

It may be a good idea to consult with a tax adviser before making gifts to beneficiaries or making other decisions about how an asset will be treated after you pass. This may help to minimize the amount of gift, estate, or other taxes that might be paid by yourself, your estate, or your beneficiaries. 

It's important to note that gold companies generally cannot provide any tax or financial advice. Furthermore, your gold IRA custodian generally cannot provide any type of financial advice. However, your custodian will likely have information such as your rate of return over the past year or other data that you can use to determine if gold is right for you. 

Gold May Be an Alternative to Government Bonds

Let's say that you're more concerned about preserving your capital as opposed to earning any type of return on it. This may be true if you are approaching retirement and can't accept sudden losses or simply don't trust banks to give you timely access to your money when you need it. 

In such a scenario, you may find that government bonds offer a safe place to put your money until you need it. However, the one drawback to bonds is that you may not be able to liquidate them until months or years into the future. 

It's also possible that your bond will have a negative yield, which means that you lose money over the life of the product. This is a risk that some investors are willing to take during severe recessions as a loss of 1% may seem like a bargain compared to potentially losing 20% in the stock market. 

Buying gold gives you a safe place to put your money without having to accept a loss. Furthermore, as you can liquidate your holdings at any time, you can get the cash you need on your terms instead of the government's. 

Gold as an Alternative to Real Estate

Flipping a home may be an ideal way to make money. However, it also means having thousands of dollars on hand to buy a home and renovate it. If you don't plan on flipping a home, you have to be ready for the tasks associated with being a landlord or paying someone to perform those duties for you. 

Ultimately, there will be significant time and labor costs that might eat away at any returns your real estate portfolio generates. Depending on where a home is located, it might only appreciate 1% in a given year, which means that it might not take much to see negative returns after accounting for your costs.

Buying gold involves little more than selecting something that you want to buy and paying for it. If you aren't keeping your gold in an IRA, you can store it in a safe at home for free. 

Assuming that you do not need to look at it, you can go months or years without touching your gold before it comes time to sell it. At that point, you simply bring your gold to a local shop to complete the transaction or ship it to whoever has agreed to acquire your collection. 

Unlike with a home or other piece of real property, you don't need to hire an outside professional to sell your gold. There is also no need to wait for several weeks or months for a buyer to obtain financing.

If you are selling locally, it might only take a few minutes or hours to complete a sale. Transaction times may increase to several days if you are selling to a company in another city or state.