Gold shines in times of economic uncertainty. There are many excellent reasons to diversify your portfolio, and gold, in particular, brings more than its share of benefits.
These benefits range from delivering positive returns over the long term, hedging inflation, its tendency to behave differently than other investments, and offsetting the risk of other investments.
These reasons and more make it easy to understand why investors turn to gold when times are bad for other investments. But if you’re considering adding gold to your portfolio, you’ll have some initial steps to take and decisions to make.
Here we explore the first steps you should take when planning to add gold to your portfolio.
Find a Reliable Supplier
The first step to buying bullion, and an incredibly important one, is to find a trusted source for bullion investments. You can purchase your bullion online or at a physical store, but finding a reputable dealer is essential in either case. There are many wonderful companies selling quality products with great customer satisfaction.
Dealers should offer competitive pricing and have safe and secure delivery processes. There should be transparency in pricing, with prices available online and dealers should show clearly the difference between the spot price and the premiums you pay on top of that.
Premiums cover the costs for the dealer, as well as costs from the mint or refiner that manufactured and shipped the bars or coins. Premiums can vary according to supply and demand, volume, product, and economic conditions. That’s why it’s important that dealers be upfront about these costs.
Choose Your Product
Just as when you invest in the stock market, you have to decide which stocks to invest in, with bullion, you have to choose which products to invest in.
Gold bullion comes in two forms, bars and coins. The good news is that these are both excellent investments. However, there are a few differences between them, which might help you decide which option is best for your needs.
Coins are made by mints in different countries and are high purity gold products. Coins are well-recognized and are in high demand, making them easier to sell. The premiums for coins tend to be higher because of the smaller volume and more intricate designs. However, the resale price also tends to be higher. Alternatively, bars have lower premiums, so they are a great option for those looking to reduce their upfront costs.
Of course, one way around making this decision is to purchase both coins and bars.
Decide How Much to Allocate
A balanced portfolio should include different assets, including bullion. When determining how much bullion to invest in, it’s important to look at your portfolio and decide how much you want to allocate to gold. You can purchase the total amount of bullion you wish to allocate all at once or buy it in smaller amounts until reaching your goal.
Gold makes a fantastic addition as it adds diversification and a defensive position to your portfolio.