Invest in Gold without Risk

Gold and your Investment Portfolio

When it comes to making smart investments that minimise risk and maximise return, you may be concerned that currently all your eggs are in one basket. However, you also may have considered diversifying your portfolio by investing in gold. Though how can you invest in gold without risk?

Gold is a particularly a high achiever in unpredictable markets and this makes the precious metal an attractive option for portfolio diversification and an important addition to every investment portfolio; utilised to hedge and offset losses. Therefore, gold is considered as a smart investment choice for diverting risk and is considered an important investment to include in a diversified portfolio.

Gold is a tangible asset that can be traded at anytime and has intrinsic value that protects your investment portfolio from inflation and depreciation. The price of gold has increased by over 385% in the last 20 years, particularly in times of depression and financial crisis – when those holding physical gold were some of the few to exit those economical events unscathed. With a return of 7.42% (compound annual growth rate) over the last three years, gold is revered as an insurance against currency failure and global financial collapse, as the price of gold typically rises when the finance markets drops.

For you as the holder of an everyday and savings bank account, gold could also be a better way for you to invest your savings and actively put your money to work. While gold is a long-term investment, you could be earning as little as 0% on your savings fund compared to a stable return on gold over the same period.

As News.com.au explains in an article published in October this year, “Keeping your cash in savings might actually be costing you,” as they go on to explain that with the current all time low interest rates it could take as long as 39 years to double your money. To add to this Australia is experiencing a creeping inflation rate, which means the purchasing power of your money is declining, allowing you to buy less with your money – with retirees and those with cash savings due to suffer the most.

Ways to Invest in Gold

The multiple uses of gold gives the precious metal inherent value, but how can you, as the greatest investor in your own future, use gold to your advantage?

When you talk about investing in gold, you’re talking about investing in either paper gold or physical gold. Private Vaults Australia explores the key differences between physical gold and paper gold in the article titled, ‘Physical Gold, Not Paper Gold‘. The two ways to invest in paper gold is either to buy into an Exchange traded funds (ETFs) or to trade in gold stocks offered by a gold mining and exploration company.

The problem with both of these is that you don’t actually own any physical gold, which grants you all the risk minimising benefits. With an EFT you own a share in the fund, as with investing in a gold mining company you buy a stake in the company.

Purchase Physical Gold

If you don’t have the time to go out and prospect for the precious metal, the third option to invest in gold is to purchase physical gold from a trusted dealer in the form of gold bullion, for example. By owning physical gold, you eliminate your risk because the gold is held outside of the financial system and, unlike other assets, owning physical gold has no third party liability attached to it.

An advisor to Gold Bullion Australia, David Mitchell, Managing Director of Baird & Co Asia, explains in the e-book titled, ‘Why Buy Gold?‘ that diversification into physical gold at this particular juncture in history is important. 

The good news is that availability of bullion to the public has increased through a series of products. Options to invest in precious metals through vendors and online traders has made buying physical gold at spot price an easy and affordable option.

If you’re new to gold investment, Private Vaults Australia is here to answer any questions you may have about buying gold bullion. PVA is a secure safe deposit box facility and gold and silver bullion dealer servicing the Sunshine Coast and Brisbane region.

For more info on how you can invest in gold without risk, contact PVA or read the PVA blog for more interesting news, tips and ideas to guide you.