Gold: A Gleaming Investment in Uncertain Times?
Remember January 2011? Back then, gold was on a tear, reaching a staggering price of around $1,370 per ounce. For those looking to invest, a 100-gram gold bar would have set you back close to $4,500. Fast forward to today, and that same bar would cost you roughly $11,500 – a significant increase of over 150%.
So, the question begs: is gold still a viable investment option?
With global debt levels skyrocketing and inflation showing no signs of slowing down, many experts believe a surge in gold prices is inevitable. Some even predict an ounce of gold could reach as high as $10,000. But here’s the catch: will premiums remain high when (or if) that happens?
Premiums are the additional costs added to the spot price of gold, usually to cover things like refining, minting, and dealer markups. Right now, premiums can be quite substantial, especially on smaller gold bars.
So, with potentially rising gold prices, will these aftermarket premiums disappear? It’s unlikely. The costs associated with producing and selling physical gold are still there. However, the relative impact of the aftermarket premium might disappear as the spot price climbs. Question yourself what sort of premium you would be paying for a 100 gram gold bar today.
This leads us to another critical question: what’s your exit strategy?
If you’re considering investing in gold, you need a clear plan for when to sell. Are you aiming for a short-term profit, or do you see gold as a long-term hedge against inflation? Knowing your goals will help you determine the best time to cash in.
Now, let’s talk affordability. A whole ounce of gold might be out of reach for many investors. That’s where fractional gold comes in! Fractional gold allows you to purchase smaller portions of a gold bar, making it a more accessible investment option for everyone.
Considering the current challenges related to fractional gold and whether it’s worth buying now.
The Pros and Cons of Fractional Gold Investment
Pros of Investing in Fractional Gold:
1. Affordability: Fractional gold coins allow you to build a collection without breaking the bank. Unlike larger and heavier coins, which can be expensive, fractional gold provides a more budget-friendly entry point for investors. If you’re a numismatist or a hobbyist, this affordability makes it easier to diversify your portfolio without committing large sums of money upfront.
2. Easy Trading: Fractional gold is easy to trade. These coins are readily available, and their relative popularity ensures that they can be sold easily at coin shops or online dealers2. If you’re looking to regularly invest in gold, fractional coins allow you to buy little and often, following a dollar-cost averaging strategy.
3. Spendability: Smaller gold coins, such as fractional pieces, can serve as an emergency hedge. In uncertain times, when major currencies lose value, owning smaller gold coins provides peace of mind. If the unthinkable happens, you could use these coins for bartering and purchasing goods.
Cons of Investing in Fractional Gold:
1. Higher Premiums: Fractional gold coins often come with higher premiums compared to larger gold bars or full-sized coins. These premiums can erode potential gains over time, especially if you plan to invest a significant amount in gold. However, the relative impact of the premium might decrease as the spot price of gold rises.
2. Limited Selection: While fractional gold offers benefits, there is a more limited selection of fractional coins available compared to larger gold options. If variety is essential to you, consider this factor when deciding on fractional gold investments.
3. Selling Challenges: Selling fractional gold coins can be more complicated than selling full-sized coins or bars. Ensure you have a clear exit strategy and understand the market dynamics before investing.
Is Fractional Gold Worth It?
Let’s delve into the world of gold investment, considering the current challenges related to fractional gold and whether it’s worth buying now.
The Pros and Cons of Fractional Gold Investment
Pros of Investing in Fractional Gold:
4. Affordability: Fractional gold coins allow you to build a collection without breaking the bank. Unlike larger and heavier coins, which can be expensive, fractional gold provides a more budget-friendly entry point for investors1. If you’re a numismatist or a hobbyist, this affordability makes it easier to diversify your portfolio without committing large sums of money upfront.
5. Easy Trading: Fractional gold is easy to trade. These coins are readily available, and their relative popularity ensures that they can be sold easily at coin shops or online dealers2. If you’re looking to regularly invest in gold, fractional coins allow you to buy little and often, following a dollar-cost averaging strategy.
6. Spendability: Smaller gold coins, such as fractional pieces, can serve as an emergency hedge. In uncertain times, when major currencies lose value, owning smaller gold coins provides peace of mind. If the unthinkable happens, you could use these coins for bartering and purchasing goods1.
Cons of Investing in Fractional Gold:
4. Higher Premiums: Fractional gold coins often come with higher premiums compared to larger gold bars or full-sized coins. These premiums can erode potential gains over time, especially if you plan to invest a significant amount in gold3. However, the relative impact of the premium might decrease as the spot price of gold rises.
5. Limited Selection: While fractional gold offers benefits, there is a more limited selection of fractional coins available compared to larger gold options. If variety is essential to you, consider this factor when deciding on fractional gold investments3.
6. Selling Challenges: Selling fractional gold coins can be more complicated than selling full-sized coins or bars. Ensure you have a clear exit strategy and understand the market dynamics before investing3.
Fractional gold remains a worthy investment for those seeking flexibility, diversification, and accessibility. However, it’s essential to weigh the pros and cons based on your individual goals and risk tolerance. Remember that gold is a long-term investment, and consulting a financial advisor is advisable to ensure it aligns with your overall investment strategy.
Here at Bullion Store, we offer a variety of fractional gold options to fit your budget and investment goals.
So, what do you think? Is gold a good investment for you? Would you prioritize affordability with fractional gold, or are you looking for larger gains with potentially higher premiums?
Share your thoughts in the comments below! We’d love to hear your investment strategies and answer any questions you might have about gold.
