When you think about the stock market, you’re probably picturing people trading stock in companies and worrying about quarterly reports, right? Well, that’s not all that happens on the stock market. Many investors prefer to skip out on stocks altogether and instead invest in commodities like silver and gold.
And, as it turns out, gold investments have remained a popular way for investors of all experience levels to dip their toes into the market. You can invest in gold in a number of ways, and many argue that it’s important for a diversified portfolio to have some investments in precious metal.
Ways to Invest
There are a few ways to invest in gold. The simplest is to just buy physical gold items. Coins, rings, chains, and even traditional bars can all be stored relatively easily and will act as a physical representation of your investment.
Another option is to trade gold as an ETF, or an “exchange-traded fund,” a common way to buy gold like you would stock in a company. For those who wish to invest in companies and gold at the same time, there’s the option to invest in the shares of a gold mine or gold mining company.
Gold has value for a few reasons. The first, and simplest, is that gold is a longstanding symbol of wealth and prosperity. The precious metal has been used as currency since 560 BC, at least, and has a reputation of being synonymous with “valuable”. This perception is helpful as an investment, as it means that people are likely to find gold desirable even when it’s not in a necessarily practical role.
Another reason investors may favor gold has to do with its use in jewelry. People generally like the warm appearance of gold jewelry, and the metal is scarce enough that jewelry shaped from it tends to be valuable. Another practical application of gold is in some electronics, where gold plays a vital role in some circuit boards.
Guarding Against Inflation
Gold enthusiasts primarily suggest gold as an investment due to its tendency to preserve wealth against the rate of inflation. Many portfolios simply include gold because it is a good way to diversify. It’s not a stock or a bond, and it’s not connected to real estate. This makes gold a unique investment for those wishing to shore up their account against market instability. Historically, when the market has experienced shake-ups, gold has tended to stay relatively stable.