It’s very easy to understand the value of diversifying into gold. Since stock prices are based on market sentiment that will not always be positive, people can only get greedy for so long until they become fearful. These two emotions are the only things that drive Wall Street – greed and fear. That is why it is very important to diversify into real estate, precious metals, bonds and other investments to temper any potential downsides to your stocks. You can go a long way in diversifying into different kinds of stocks. For instance, for every share of Facebook or Twitter that you own, you probably should buy General Electric or IBM. With that said, you can only diversify so much because if real market crashes, even the best stocks can get dragged down. That is the reality of dealing with an equities market. To make matters worse, another reason why the stock market is recently going crazy in terms of appreciation is the amount of cheap money flooding the global financial markets. When the governments print out huge amounts of money with nothing to back it up, they are basically inflating asset prices that are measured in paper money. Do you see where this is all headed? It’s like a giant financial house of cards that takes only strong move to make the whole thing come crashing down. In 2008, that big shock was supplied by the failure of Lehman Bros. Who knows what the trigger would be for the current stock market? Therefore, it is in your interest to not wait around and see what that trigger would be. Instead, spend your time and energy into finding the right diversification strategy. Here are the five of the reasons why you should own gold bars.
The good thing with gold is that there are many types of investments for it. There are gold stocks, gold coins, gold bullion and gold bars. One of the key reasons why you should own gold bars is that it is pure compared to other forms mentioned. This purity enables you to play the price simply and clearly because of its transparency. Looking at the gold bars you are holding is like simply looking at its market price and knowing how much you are dealing with. On the other hand, gold coins have a different value because they are collectors’ items. You may be put in a position where its appreciation is not that high because of the collectors’ value holding it down. This is contrary to pure forms of gold. While collectors’ value often goes up, this is not automatic. Collector sentiment comes and goes. It has its own specific market cycles. While a downward trend is rather unusual with gold coins, it does happen and this should be factored into your investment decision. With gold bars, the price just goes up and down along with the market. There is no other sources of value to be worried about.
As mentioned above, gold coins have a value because people collect them and their price moves based on the market price of gold that they contain. With that said, the collectors’ value might have certain issues with the collectors’ perception of the gold coins that you are holding. As a result, these coins might not appreciate as high as you would like. Since its value is tied to the precious metal, you might think that you will be able to beat the market but rather, you are just actually barely playing it because these coins don’t weigh that much. Do you see what’s wrong with this picture? If you want to play the gold market in a more direct way, you should go for a pure form of gold. This will simply put you in a position where gold values will not be a distraction.
As you probably already know, gold is used as part electronic goods. There are certain electronic parts, wiring and circuitry that utilize it. There is also a huge demand for it in the jewelry industry. This then proves that gold has a strong industrial base. The reason why it doesn’t crash below a certain price is the industrial base holding it up. If you’re trying to figure out why you should own gold bars, remember that these are close to the pure industrial form of gold. They compare this with buying gold-mining shares or gold coins. You have to convert it to get the pure gold price. Dealing with gold bars, you are assured that the industrial demands for gold is transparent. It is because the price that you will be paid when you cash out your gold holdings will correspond to this demand.
You don’t have to buy an assault rifle to store all the gold bars in your home. In fact, storing them at home is not a good idea. There are specialized and ensured gold storage facilities. You can even store them in your bank safety deposit box. You just have to be aware of secure and ensured places to store them. In other words, if in the off-chance it will be stolen, it can still be replaced. Gold is really easy to store if you think about it.
One of the big reasons why you should own gold bars is its sizing flexibility. Usually, when it comes to gold bullion and gold bars, people think about those stereotypical bricks of gold they see on TV. There are actually many different standardized sizes of gold bars. Picking the right size lowers the assay and storage costs of your gold. With that said, make sure to pick the right size.
Make no mistake about it. If you want to protect your hard-earned money against market crashes, inflation or even devaluation of your currency, you cannot do any worse than investing in gold bars. Study the reasons above as they help you spell out why should own gold bars.