Gold has remained a proven store of value and safe-haven asset for millennia, and that’s not likely to change anytime soon, especially in these uncertain times. But what is gold? And how much do you actually know about it? Many people want to purchase gold bullion, but they don't have enough information to make an informed decision. Let’s take a closer look at gold, its uses and everything else you need to know about this precious metal before investing.
What Is Gold?
Gold is a soft precious metal that people throughout the world have used for thousands of years.
It has cultural and monetary worth that spans continents and has been valued throughout history for its beauty, functionality and scarcity. Due to its capacity to maintain or increase its value during critical moments such as financial and political uncertainty, it has always been considered a monetary instrument and safe-haven asset. Today, about 20% of all the mined gold is held in reserves as bullion by central banks or used by investors to protect their wealth.
Gold has served as the currency of some of the world's most prominent civilizations, but it wasn’t until the late 19th century that the value of currencies was tied to a precise amount of gold.
After World War II, most of the world's largest economies operated in a financial system based on a fixed gold price that was tied to the US Dollar, but this came to an end in 1971, when the US decided to separate its currency from the commodity.
Even though we no longer use gold as a currency, the price of the Gold precious metal continues to have an influential impact on financial markets and global economies.
What Is Gold Bullion?
People often use "Gold bullion" to refer to gold bars exclusively. However, this is inaccurate. The word “bullion” pertains to assets that derive their worth from their precious metal content. Therefore, Gold bullion is, in fact, investment-grade gold (at least 99.5% purity) that has been converted into gold bars or minted into gold non-numismatic coins.
Before buying gold, it is important to differentiate between simple gold and gold bullion. Gold can refer to anything containing the precious metal, such as gold ore, gold flakes, or gold jewellery. Gold bullion, however, refers only to high-purity gold that is traded for its gold content rather than its form.
Also read: What is Gold Bullion?
What Are Gold Bars?
A gold bar is a solid block of gold with a purity of at least 99.5%. They are supplied by sovereign mints and private refineries and come in various weights and sizes. Larger gold bars are cast by pouring molten gold into a mould, and smaller ones are minted with heavy machinery.
Also read: What are gold bars?
What Are Gold Coins?
Gold bullion coins are flat and disc-like, similar to the legal tender coins we use on a daily basis. However, while they might look the same, they are very different. Gold bullion coins are extremely valuable and are guaranteed by a sovereign state. Each coin is expertly crafted with complex designs that distinguish each variation and make it easy to recognise.
Read more: What are gold coins?
Who Buys Gold?
People buy gold for various reasons. Some buy gold for an element of financial security or to diversify their investment portfolio, while others invest in the precious metal, intending to increase their wealth through speculation. We can narrow this down even further into two camps: those holding it as a means of storing value and those betting on its price fluctuation.
Statistically, the biggest gold investor in the world is, unsurprisingly, the US government, which owns about 5% of the world's gold. Germany, Italy, and France are the following biggest gold-holding countries. Next up is the International Monetary Fund (IMF), the biggest non-government related gold owner.
But it's not only big institutions that purchase gold for investment purposes. In Indian culture, gold plays an important role culturally, especially during the Hindu festival of Diwali and weddings. Many Indians regard gold as a status symbol, and buying gold forms a significant part of Diwali and weddings. This puts India right at the top among some of the biggest gold buyers in the world.
Recently, an increasing number of private individuals have been investing in gold. This is because more and more people realise the intrinsic value of gold, along with its potential as a store of value. Investing in traditional assets, such as stocks, has become increasingly more risky, which is why gold has become such a hot commodity among investors. Let’s take a look at why buying gold is a solid choice.
Also read: Should you invest in Gold?
Is Buying Gold a Good Investment?
So why buy gold? Well, firstly, you might want to buy gold since it is a safe haven during turbulent times such as periods of war, economic uncertainty or even, as we saw during the COVID-19 Pandemic, a global crisis. During such unstable times, gold actually tends to hold its value or even appreciate, while the value of other assets such as stocks or bonds becomes more uncertain. But there are a number of other reasons why buying gold is a good investment. Let's take a look.
Read more: Is gold a good investment?
Stable Intrinsic Value
While gold prices fluctuate, the intrinsic value of gold is significantly much more stable than other assets. This is because unlike other assets like stocks and bonds, physical gold will always have a value and will never go to zero, it will never go bankrupt. It is widely used in industry because of its naturally physical properties. As a result, gold retains its value during times of geopolitical tension or uncertainty and tends to outperform other investments. Also known as the "crisis commodity," investors often flock to it for its relative safety, mostly when people lose faith in governments.
Hedge Against Inflation
Owning physical gold can help protect against the negative consequences of inflation and abrupt changes in the marketplace. Since gold's price tends to rise when the cost of living increases, it is a great hedge against inflation. During years of high inflation, gold prices can appreciate significantly in comparison to traditional investment assets such as stock and bonds. This is because a currency loses its purchasing power during inflation, and gold rises in currency terms, along with everything else. Furthermore, because it is an excellent store of value, people tend to buy gold when they suspect their currency is losing value.
Diversifies Investment Portfolio
Finding investments that are not strongly correlated with one another is the key to diversification. Historically gold has negatively correlated to stocks and other financial instruments, which means that gold tends to perform well when these other instruments lose value. Therefore, shrewd investors add gold to their investment portfolio to lower overall volatility and risk. When used to diversify an investment portfolio, it can also help cushion the blow if other markets turn bearish.
In summary, investing in physical gold is a good idea because it:
- Acts as a safe haven during times of economic turmoil, because it tends to maintain its value or appreciate
- Has no counterparty risk
- Diversifies your investment portfolio
- Acts as a hedge against inflation
- It is safer than other investments during geopolitical uncertainty
Can I travel with gold?
Generally, you can travel to abroad with your gold. However, you need to do your due diligence before you leave. Some countries have strict regulations, so you may need to declare your gold to customs officials. We also recommend contacting the airline you plan to travel with beforehand in order to find out about security checks and weight restrictions. While it would be best to keep your gold in your hand luggage so that you can have it with you at all times, weight restrictions are even stricter on hand luggage, so check ahead of time.
To be on the safe side, we also recommend taking with you documentation that proves you are the owner of the gold bullion. This could help you avoid any unnecessary questioning by customs officials or airport security.
Also Read: How much gold can you travel with?
How to Buy Gold
If you’ve been googling stuff such as “how to buy physical gold”, “how to buy gold bars”, or “how to buy gold coins”, this section is for you.
With GoldCore, purchasing gold bullion such as bars and coins is quick and straightforward. To get started, simply click on the “open account” box in the top right corner of our homepage and fill in your details.
GoldCore has a variety of accounts you can choose from to meet your specific requirements. You are free to open as many accounts as you want in as many currencies as you like.
Choose from any of the following options:
- Personal Account: Ideal for private individuals, you can use a personal account to manage your investments, buy, sell, store or take delivery of your gold bullion whenever you like.
- Joint Account: Similar to a personal account, a joint account can be used by more than one individual. There is also the option for a single or dual signature account.
- Corporate/Trust Account: Companies, charities, and trusts can make use of this account type. To set up this type of account, all you have to do is provide the required documentation and appoint a representative to operate on behalf of the company/trust/charity.
- Pension Account: You can handle precious metal-approved pension investments for a more secure future with our pension account. It's worth noting that pension assets cannot be delivered to an individual while it resides in a pension account.
- GoldSaver Account: A cost-effective option, our GoldSaver Account is popular with investors. This account acts like a savings account. Each month, for a minimum of 12 months, you can save a pre-set amount in gold bullion. After this time has passed, you can either cash in on your investment or continue saving monthly. If you wish to take delivery of your gold you will need to convert your holdings into allocated gold, charges may apply.
You will also need to provide documentation to prove your identity and give proof of residency, such as a passport and utility bill that is not older than six months. The next thing you need to do is add funds to your account. You can do this using a bank transfer or a credit/debit card.
Now you are ready to invest.
Is It a Good Time to Buy Gold?
As with any asset like stocks, bonds or property, timing your purchase is very difficult. However, successfully purchasing gold is not solely about timing the market.
Gold is an asset that is negatively correlated to traditional assets. It performs well during times of economic turmoil and geopolitical tension. It is a proven hedge against inflation and has been desired by humans for thousands of years. As a result, gold is the perfect diversifier for an investment portfolio and acts as a form of financial insurance against uncertainty. Therefore, a rough rule of thumb is to hold 10% of your portfolio in gold.
There is an old Wall Street adage that says that you should hold 10% of your portfolio in gold and hope that it doesn't work. If it doesn't work (i.e. it goes lower) it suggests that risk and uncertainty is low and the other 90% of your portfolio is performing well.
Therefore, the most important decision to make is to have some gold in your portfolio.
Also read: When to buy Gold?
Where to Buy Gold?
Wondering where to buy gold bars and where to buy gold coins? It’s not as difficult as you may think. However, you need to do thorough research when deciding where to buy gold. We recommend reading customer testimonials to ensure you're dealing with a reliable trader you can trust.
With over 14,000 clients and over $1 billion in transactions, GoldCore is a prominent choice among precious metal investors. Here are some of our satisfied customers' testimonials.
Physical gold is a long-term investment that can assist you in safeguarding your wealth. It is an excellent addition to your financial portfolio because it lets you diversify the risks of other investments.
Investing in gold is easier than ever before, thanks to GoldCore. We understand that each client's requirements are unique, which is why we work hard to give you the best service and solutions possible. But there’s more. We also provide some of the most competitive premiums for gold delivery and storage in the UK market.
Contact GoldCore Today
If you have any questions or concerns regarding investing in gold bars, or you don’t know where to start, we’re more than happy to help you. We offer a free strategy call to discuss your options and make recommendations based on your specific requirements.
To understand more about gold investment, schedule a strategy call with one of our experts.
Alternatively, contact us by calling one of the following numbers:
Also read: What is Silver?