Jeffrey Hazzard


People have been investing in physical gold for ages. Possession of gold in the form of jewelry, coins, or bars is still seen as a wealth and status symbol. When it comes to coins and bars, it is more beneficial to invest in smaller sizes as compared to bigger ones. Bigger, heavier bars and coins are good to look at, but they are not liquid- meaning it is difficult to buy and sell them. Gold jewelry is relatively easy to purchase and sell. However, gold investments come with a few risks, which are discussed below:

Security and Storage:

Physical gold is prone to theft or robbery due to its high value in society. Physical gold- be it jewelry, coins or bars comes with concerns of storage. Physical gold can only be stored in highly secure safes and should be protected against potential fire hazards as well. As a rule of thumb, gold should be kept in a safe deposit box provided by the banks or a secure vault that is protected against humidity and temperature fluctuations. Keeping your gold in banks also comes with risks- bankruptcy, bank robbery, natural disasters, etc. As per RBI guidelines, banks are not liable for any loss of valuables that may happen in such situations.

Purity Concerns:

One of the major concerns while investing in physical gold is its purity. The actual value of gold is measured in terms of its purity, and the purest form of gold is called 24K or 24 carats. Gold is mixed with small amounts of copper, nickel, palladium, zinc, or silver while molding them into jewelry to increase its strength and durability. Care should be taken to conduct adequate research and find a trustworthy and reputable gold seller.

Purity Concerns

Manufacturing Charges:

One of the major risks associated with physical gold investments is the manufacturing charges that come with it. If not always, these manufacturing costs exceed the actual cost of the gold you are purchasing. While purchasing physical gold, there is an added expense of 3% of GST. If you have decided to invest the purchased physical gold, you are also required to incur capital gain taxes depending on how long you have held the gold.

Negligible Income:

The only way to get a profit out of your gold investments is by selling them at a market price greater than when you bought them. The risk associated with these kinds of gold investments is that they are heavily dependent on market fluctuations. Unlike other gold investments such as mutual funds and ETFs, physical gold investments do not generate passive income. Therefore, it’s better to invest in many options for the purposes of profile diversification and early retirement.

Gold has always served as a safe investment and international uncertainty. Along with stocks, it is smart to have some gold investment because it is negatively connected with equities. Aside from these benefits, gold is also very simple to invest in. Gold may appear appealing due to its long-standing image as a measure of wealth, particularly during difficult times. One of the simplest ways to invest in gold is through ETFs, which are similar to stocks and trades but can also be used to conveniently purchase precious metals while being online.

Investing in gold is one of the most profitable investments you can make. When liquid assets, such as those held in a bank are affected by inflation, gold is usually spared. However, the relationship between gold and inflation is not as simple as it appears. Gold had little effect on inflation in numerous countries. However, their prices have remained rather stable in recent years, particularly after the pandemic. And while their prices did not skyrocket and boost their value, they did not create any losses for investors, making them a great investment alternative.

Gold is considered a highly liquid asset that outperforms all other investment possibilities. This was also seen by the largest financial magazine Forbes, which stated that gold might be traded and exchanged in various countries just like any other cash.

Because of the vast number of investors that regularly buy and sell commodities worldwide, gold and silver can be quickly traded for cash, making them particularly liquid assets. You can also see that the official sector of the gold market has a significant amount of gold that is stable and is not traded on the open market. However, due to central banks’ involvement, gold is provided in the market, creating a significant demand for it.

Stocks and mutual funds are both excellent investment instruments. But gold is better, especially when you want to diversify your portfolio. According to many experts, gold is an excellent strategy to diversify one’s portfolio because it has a low negative relationship with all the biggest investments. Gold also shields one’s portfolio from volatility, which can reduce returns. Furthermore, because most equity markets cannot impact the price of gold, investing in gold carries almost no risk. As a result of the high rate of return, it can be stated that gold is a good option for portfolio diversification.