If you’re a new gold investor, you’ll come across several options as you explore ways to diversify your portfolio. Two of the main ones are gold stocks and physical gold, or bullion. If you’re on the fence about which one to buy, the precious metals experts from First National Bullion, the best place to buy gold in Carlsbad, offer the following tips as you weigh your options among investing in physical gold, gold stocks, or a combination of these two possibilities.
Also referred to as “gold paper,” gold stocks function almost like any other stock you would purchase. The biggest difference is that you’re investing in companies with ties to actual gold. Therefore, the value of stocks is linked to the price of gold and not just what’s going on with the stock market. If markets take a dive, your gold stocks may still retain most of their value.
There are three main types of gold stocks:
• Gold ETFs – Exchange-traded funds are investments backed by gold, but you’re not investing in physical gold.
• Gold mining stocks – These are stocks specifically linked to gold mining companies. The potential risk here is that results are also based on how well the company is doing and what’s going on with the mining industry.
• Gold certificates – While not technically stocks, gold certificates are a paper form of gold ownership—meaning you’ll get a document that says you own a specific amount of gold you don’t actually possess.
Pros & Cons
With gold stocks, you can easily liquidate your assets, just as you can with regular stocks. Also, there’s no need to worry about gold storage or insurance, since you don’t actually have possession of any gold.
On the other hand, gold stocks are considered a higher-risk investment, since there’s some dependence on the stock market. Also, you don’t physically own the gold, which is a negative for some investors.
With this option, you physically own the gold. Physical gold can also be placed in an IRA-certified account. However, you’ll need to make sure it’s IRS approved if you plan to put it in a gold IRA. There are two primary types of physical gold or bullion:
• Gold bars – Gold bars can be cast (which usually results in bars that are a bit “rougher” in appearance) or minted. Minted bars are typically shinier and smoother, which allows them to retain their value better.
• Gold coins – Gold coins are created by mints, and they have a specific face value. But the actual value can be higher for coins that are older or ones with certain historic or collectable value.
Pros & Cons
With physical gold, the biggest pro is that you directly own the gold. Also, gold tends to be more valuable when there’s an economic downturn, which can minimize losses if you have other investments in your portfolio.
On the flip side, you’ll need a custodian-monitored IRA for legal storage of your gold. You’ll also have to pay an annual fee to store, monitor, and insure physical gold.
If you decide to purchase physical gold, make sure to work with experienced trustworthy professionals. Whether they’re looking to buy gold bars, platinum coins, or silver bullion, Carlsbad residents can trust the reputable dealers at First National Bullion. We’re a boutique precious metals firm with highly experienced professionals. If you’re looking to add precious metals to your collection, call us today at 760-253-8072.
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.