If you’re looking for ways to start investing your money this year, there are a few common paths you can take—you can invest in stocks, launch your 401(k), open up a high-yield savings account—or, you could invest in gold. That’s right, this precious metal isn’t just for pirates and gold miners to haggle over. In fact, gold is one of the most consistent investment avenues of all time. For centuries, societies have assigned value to this natural resource and used it to trade, barter, and make money across time and space.
Before you start investing in gold, you’ll want to be able to answer the following questions with confidence:
- How much is gold worth?
- Is gold a good investment?
- How much is the price of gold?
- What’s the best way to buy gold?
In this post, we’ll answer these questions and more to help you determine whether gold is the right investment for your portfolio. Have a specific question or subject in mind? Use the links below to skip ahead.
- How Much is Gold Worth Today?
- Is Gold a Good Investment?
- How to Buy Gold
- Key Takeaways
How Much is Gold Worth Today?
At the time this article was written, November 30th, 2019, MoneyMetals.com reported that one ounce of gold was worth $1,464.35.
As you can see in the chart below, the price of gold fluctuates on a daily (sometimes hourly) basis, just like any security on the stock market would. In one year, the value of one ounce of gold jumped from $1,224.65 to $1,464.35 (an increase of $239.70).
*Values are per ounce of gold. Source: MoneyMetals.com
Why is gold valuable?
Besides being a classy way to accent your best dress or adorn your home, gold is valuable for a number of reasons:
- It’s durable and doesn’t rust or corrode, but it is malleable which allows it to transform into other things
- It’s useful for a variety of applications, including dentistry, electronics, jewelry, and currency
- It can conduct heat and electricity
What causes gold prices to shift?
Like most investment types, the value of gold can change based on a combination of different factors:
- Interest rates
- Investor behavior
Is Gold a Good Investment?
According to a survey from Thomas Reuters, U.S. investors held 14.3 tonnes of gold investments in 2018, the most when compared to our neighbors in Canada and Mexico. However, when compared to data over the last decade, 2018 marked a record-low for gold bar investments.
That said, gold investment is still pretty active across the globe, but the numbers don’t necessarily determine whether gold is a good investment for you. Before you go off and buy up yellow metal left and right or write it off altogether, you may want to look at the pros and cons of buying gold to help you decide whether or not gold is a good investment for you.
- Many people find that owning a tangible asset (like gold) is a satisfying investment.
- Investors can easily have gold tested for authenticity.
- There is a potential for profit.
- The value of gold doesn’t shift as much as stocks and other types of assets (this could be a good or bad thing depending on how much you want your investment to grow in value rather than stay consistently valuable).
- Gold can act as a hedge or safe haven to help investors minimize losses during market downturns.
- Gold dealers often charge high transaction fees.
- It’s more difficult to verify rare and old coins.
- Storing and insuring gold assets is an added expense.
How to Buy Gold
Another benefit of buying gold is that it’s flexible—there are many ways you can choose to invest depending on your preferences, budget, and financial goals.
Types of gold assets
- Gold Futures: Both gold and silver can be traded using the futures system. In the most basic sense, gold futures are an agreement wherein an investor and seller agree to exchange gold on a specific date for a predetermined price. The primary advantage of buying gold futures is that the investor doesn’t have to make the full payment upfront, and instead, can make continue to make payments until the asset has actually been exchanged.
- Gold Coins: According to the World Gold Council, gold coins have represented approximately two-thirds of annual gold investment over the last decade. This makes gold coins one of the most popular types of precious metal investments, especially for individual investors (like yourself). Gold coins are typically sold in the following denominations: 1/20, 1/10, ¼, ½, and 1oz. There are many different types of gold coins you can invest in from global currencies to rare and old coins. The most popular gold coins include: the American Gold Eagle, the Canadian Maple Leaf, the Australian Gold Nugget, and the South African Krugerrand. The S. Mint says you can buy gold coins produced by the Mint from one of their many Bullion Dealers, listed on their website, USMint.gov. Additionally, many banks also sell gold coins.
- Gold Companies: Another way you can invest in gold is by going straight to the source (the mine). To invest in companies that fund gold exploration, you’ll typically have to purchase gold stocks. Gold stocks are traded on a variety of stock exchanges such as the NYSE and the TSX (Toronto Stock Exchange). If you’ve already tried your hand at investing in stocks, this might be a natural next step to expand your investment portfolio.
- Gold ETFs and Mutual Funds: Gold funds are backed by gold assets, meaning that you do not actually own the physical gold, but you own the securities that are backed by gold until the asset is sold.
- Gold Bullion: Gold bullion is a bulk quantity of gold bars (sometimes coins) that can be purchased from a bank or bullion dealer.
- Gold Jewelry: Buying high-quality gold jewelry is one of the easiest—definitely most fashionable—ways to invest in gold.
Tips for buying gold
Like any other type of investment, it pays to be informed and responsible when investing your hard-earned dollars into any type of asset or security. If you decide to pursue gold investments, keep these tips from the FTC in mind:
- If investing in coins or jewelry, ask what the item’s melt value is.
- Shop around for the best deal. Some banks and bullion dealers will offer gold at a lower markup than other retailers. Take your price shopping a step further by searching for the item’s market price online.
- Hire an independent appraiser to get a second opinion on the gold’s worth and liquidity.
- Consult the help of a financial planner or advisor for extra guidance as you begin investing in gold.
- Consider the additional costs that you might incur along with the initial sale price, including insurance and a physical safe which may lessen the value of your investment.
- Beware of gold retailers that pressure you to buy immediately—take your time to decide whether gold is the right investment avenue for your situation before investing.
- Ask the retailer for a certificate of authenticity or a guarantee to verify the gold content. Be sure to research the company that issues the guarantee to ensure that they’re a credible organization (unfortunately, these documents can be fabricated).
In addition, before choosing a gold asset (or any other asset) to invest in, you may want to consider your budget and your financial goals.
- How much is gold worth? At the time this article was written, November 30th, 2019, gold was valued at $1,464.35 per ounce.
- The value of gold is impacted by supply and demand, investor behavior, inflation, and interest rates.
- Where to buy gold:
- S. Mint bullion dealers
- Major banks
- Stock exchanges
- Bullion dealers
- Gold can be a helpful asset to have in the event that your other securities aren’t performing so well due to a market downturn. Since it’s less volatile than other assets, gold can act as a hedge against inflation, which could minimize your losses in other areas.
- Investment experts recommend diversifying your investment portfolio in order to lessen the risk of being negatively affected by market changes. Investing in gold can be a great way to diversify your assets!
When deciding whether gold is a good investment, you’ll want to consider if you’re in a position for saving vs. investing, the pros and cons of investing in gold, whether buying gold fits into your budget, and how this asset fits into your overall financial goals.