FIVE REASONS WHY WE INVEST IN GOLD

With stock markets facing major headwinds combined with low interest rates and inflated property prices it is a great time to consider other asset classes or alternatives.  By “alternative assets” we don’t mean non-tangible hedge funds but good old solid physical gold.

The greatest thing about gold is that it is an asset that countless investors have bought, held and traded since the inception of money. It is unrivalled in its ability to cross borders, language barriers, religious differences and generation gaps. Many experienced and sophisticated investors buy gold to offset their other (riskier) assets or just because they love it.

Here are 5 of the best objectives ideally suited to this time honoured asset:

1.      For the long term.  Any financial adviser will tell you that no matter what the asset class you should consider your long term goals, implement a strategy accordingly then stick to your plan and hold.  With this in mind it doesn’t really matter at what price you buy gold but it is important to plan to keep it for the long term.  Unlike equities, gold is always there and always valuable.

The type of gold that is popular for the “buy and hold” strategy is gold bullion coins and bars, each available in a size to suit every budget.

2.      For savings. “Dollar cost averaging” is a term used by investment managers to describe buying into the market at different times to hedge the moving spot price and currency.  This is a great way to build your savings, invest a little each week or month and watch your asset build over time while levelling out your price of entry.

The type of precious metals for this strategy is pool allocated as it is cost effective with no vaulting or insurance fees.  You can buy online and simply top up your investment quickly, easily and regularly as your asset is held safely by GBA at no cost.

3.      For collecting. Coin collecting has been a popular pastime for hundreds of years. It is not just a hobby as the returns can be lucrative if you know what you are doing.

There are different types of coins to consider when it comes to investing; Numismatic Coins are rare and valuable, prices paid for these coins go far beyond the bullion content or face value.  Bullion Coins are precisely as the name suggests, they are coins struck from pure gold or silver with a fineness of 99.9%.  Bullion coins are traded everywhere, making them a great choice for anyone who travels as well as investors who appreciate an attractive and divisible asset.

4.      For Superannuation.  If you have a Self Managed Super Fund (SMSF) you can invest in almost any type of asset including gold and silver.  Many SMSF investors like to include gold in their investment strategy as it is an alternative to higher risk assets such as shares and can be readily liquidated if and when required.

The type of precious metals many clients prefer for SMSF are bars and coins, although pool allocated also makes a lot of sense as it is the most cost effective way to purchase given there are no storage or insurance fees. Rules have recently changed to disallow the storage of coins ( no matter what type) within arm’s length of the fund’s trustees. These products must now be stored by a third party and they must be insured.

5.      For trading.  At GBA we have many clients who trade in physical metal just as they would do in stocks and currency. The trick is to keep the cost of trading to a minimum. Physical metal will always be more expensive than a share for reasons that are obvious, therefore the choice of product is really important when buying gold for this purpose.

The type of precious metals for trading. Once again, pool allocated is a good option for trading. It is priced as close to spot as a physical product is able to be, and you can quickly buy and sell in and out of the pool. This is by far the most cost effective ways to purchase given there are no storage or insurance fees.

If any of these objectives suit your own and you would like to start investing, all you need to do is register an account with GBA and away you go! We are always happy to help, so if you have any questions or concerns that are stopping you from getting where you want to go, feel free to email or telephone us and together we will find your answer.

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