Ever since James Marshall saw something “shiny” in a creek while exploring parts of California in 1848, gold has been a popular and much-appreciated precious metal in the United States. If you have plans to invest in gold in some form, you’ll likely be making a smart investment, given the consistent demand for this commodity. That said, it’s just as important to be aware of the advantages and disadvantages of gold before you make any decisions.

Advantages

The main financial advantage of gold is that it tends to be an effective way to give yourself some added protection against economic uncertainty and inflation. Gold has a long history of performing well and remaining stable even when other economic conditions aren’t going as well.

Other advantages of gold include:

• High liquidity – It’s often fairly easy to convert gold to cash. In fact, gold is one of the only investments with high liquidity.
• Steady value – Historically, gold has had long periods of stability in terms of value. Even when gold prices dip, the overall value doesn’t usually go down enough to make it a less desirable investment.
• Consistent demand – As long as your gold is of high purity and quality, it’s typically not too difficult to find a buyer willing to pay a fair price. Gold is also recognized for its value and worth worldwide.

Disadvantages

Unless you opt to purchase gold stocks or forms of gold other than bullion, it’s not a passive investment. A “passive” investment is one that, like a stock or bond, can still earn you some type of income from interest and/or dividends. The only income you can generate from physical gold is by selling it.

Gold also has other potential disadvantages to consider. These include:

• Storage difficulties – Physical gold needs to be stored in a safe place because of its high value. This could mean if they opt for remote storage for their bars, ingots, jewelry, or gold coins, San Diego collectors might face added storage fees.
• Price fluctuations – When the demand for gold rises, prices can jump. This may not be such a good thing if you purchase gold during these times, since the price of gold eventually levels off again following demand spikes.
• High markup potential – If you’re not careful about who you purchase your gold from, you may end up paying a higher markup than what’s common. This really isn’t a widespread “problem” per se, but it’s a potential drawback to be aware of.

Making Wise Gold Investments

It’s up to you to decide if the potential disadvantages of gold outweigh the advantages for you. If you do decide to move forward with gold investment plans, make a more confident investment by:

• Buying gold from a reputable seller
• Determining the current market value of gold so you’ll know what a fair markup is
• Exploring storage options that may be more cost-effective, such as using a home safe or safe deposit box at your bank
• Starting smaller with your investments so you can gain more familiarity and confidence with this precious metal 

If you’re looking for the best place to buy gold in San Diego, make sure to work with trustworthy precious metals dealers who offer high-quality service and have years of experience. Call on the industry-leading professionals at First National Bullion when you’re ready to buy or sell precious metals, including gold, silver, platinum, and palladium. Give us a call today at 858-666-6570.

The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.