Investing in gold bars and coins? Pros and cons to know
Just like any other investment option, physical gold has its advantages and disadvantages. Investing in gold is a useful way for investors to protect their wealth and safeguard their portfolios from losses — no matter what the broader economy looks like. And the most straightforward way to invest in gold is buying physical gold, or bullion, in the form of gold bars and coins. Just like any other investment option, physical gold has its advantages and disadvantages, and it’s important to understand them to make the best decision for your financial goals and needs. Keep the following things in mind when considering whether you should invest in gold bars and coins. Pros of buying gold bars and coinsThere are plenty of reasons to invest in gold in any form. Here’s why gold bars and coins can be particularly valuable. Cons of buying gold bars and coinsWhile gold bars and coins offer plenty of benefits, it’s important to also keep the following drawbacks in mind. Investing in physical gold is a great way to enjoy the benefits of gold as an asset. It’s a tangible investment that’s easy to buy and sell, it’s a solid store of value and it can be converted to cash quickly. However, it’s important to also consider the drawbacks of buying physical gold so you can make the best decision for you. Be sure to weigh the benefits against the overall costs (including storage and insurance), choose a trustworthy dealer and take the time to inspect your bars and coins carefully. Article courtesy of CBS News
Gold vs Silver: 4 key differences you should know
To varying degrees, both gold and silver may provide a hedge in a potential economic or market downturn, as well as during sustained periods of rising inflation. Understanding the difference between how the two metals are used, their economic sensitivities and technical characteristics can help you determine which metal may benefit your portfolio. Here are four factors to consider when deciding to invest in gold or silver: 1. Silver May Be More Tied to the Global EconomyHalf of all silver is used in heavy industry and high technology, including smartphones, tablets, automobile electrical systems, solar-panel cells and many other products and applications, according to the World Silver Survey. As a result, silver is more sensitive to economic changes than gold, which has limited uses beyond jewelry and investment purposes. When economies take off, demand tends to grow for silver. 2. Silver Is More Volatile than GoldThe volatility in silver prices can be two to three times greater than that of gold on a given day. While traders may benefit, such volatility can be challenging when managing portfolio risk. 3. Gold Has Been a More Powerful Diversifier than Silver:Silver can be considered a good portfolio diversifier with moderately weak positive correlation to stocks, bonds and commodities. However, gold is considered a more powerful diversifier. It has been consistently uncorrelated to stocks and has had very low correlations with other major asset classes—and with good reason: Unlike silver and industrial base metals, gold is less affected by economic declines because its industrial uses are fairly limited. 4. Silver Is Currently Cheaper than GoldPer ounce, silver tends to be cheaper than gold, making it more accessible to small retail investors who wish to own the precious metals as physical assets. Article courtesy of Morgan Stanley
The hidden risks of timing the market
Buy low, sell high… It seems like a straightforward path to success. However, what if you get your timing wrong? Or, more concretely, what happens to your overall return if you’re sitting on the sidelines during, say, the best one or two days of the year? To answer this question, Alan Hibbard, in-house analyst at GoldSilver, created this table. It includes the top five daily returns for gold in 2023. The highest daily return was on October 13, when gold surged by 3.11% in a single day. And if you look at the top four days for gold, the cumulative return for those days totaled 11.63%. That means gold’s best four days in 2023 were enough to surpass gold’s entire year-to-date return (10.2%). So, what does this tell us? These findings reinforce the challenge of market timing. Aiming for optimal entry and exit points is not only difficult but can often be counterproductive. As seen with gold, missing key days can significantly impact an investor’s returns. If you were buying and selling throughout the year, and if you missed just these four days, you would have lost 1.29% while everyone else gained 10.2%. While timing the market might be tempting, the cost of getting your timing wrong is huge. For most investors, a long-term buy and hold approach is the safest and most reliable plan. Article courtesy of Brandon S, GoldSilver
