The Pros & Cons of Investing in Gold Bars

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Last Updated: April 13, 2024

As you consider your options for investing in gold, there are many. Gold bars are one of the most popular but have pros and cons. Do the advantages outweigh the disadvantages?

We are here to help our readers understand why investing in gold bars makes perfect sense in today’s economy. We know you have questions and want to learn as much as possible before you take a deep dive into gold.

Why invest in gold bars? Continue reading to learn all you need to know to decide if investing in gold bullion is right for your investment strategy. We provide the good and the bad to give you a balanced perspective.

Key Takeaways

Pros and Cons of Gold Bar Investments

Investment options can never offer 100% satisfaction because there will always be pros and cons. Why invest in gold bars? While there are many advantages to investing in gold bars, it always helps to weigh both the pros and cons to make an informed decision.

Pros

Investing in gold bars offers great peace of mind, accessible storage, and a straightforward approach to your investment strategy. You can purchase them online or at gold retailers across the country. Consider the following pros.

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Accepted Worldwide

Gold has been accepted as a global currency throughout history. Although no longer in place, the Gold Standard was once the law in the United States and backed all minted currency.

Inflation Protection

Because the United States dollar is no longer backed by gold, it has become subject to substantial fluctuations. During geopolitical uncertainty and high inflation, fiat currencies tend to devalue.

Over time, inflation decreases the value of the dollar. During high inflation, people lose money in their 401k and other monetary assets.

Stable investments, like investing in gold bullion, are less likely to lose significant value than investments tied to paper assets. Gold’s long-term volatility is much lower than assets bought on the stock market.

Gold helps counteract inflation because it grows in value during economic uncertainty periods. Diversifying your investment portfolio with gold can help you prevent significant losses to your investment value.

Easy to Store

Many people invest in gold bars because they are so easy to store. Gold bars are one of the most accessible precious metal investments to store because they are all in a basic uniform shape and around the same size. You can stack thousands of dollars in gold bars and take up very little room.

Of course, if you are investing in a gold IRA, the IRS requires you to store your gold in a certified depository. You cannot store IRA gold at home, no matter how secure your residence is.

Investment Diversification

You will hear a lot about investment diversification as you research investing in gold bars. Investment diversification means spreading your investments over several asset classes so you do not lose it all in a single stock downturn.

Gold bars are an excellent addition to your investment portfolio. If they are pure, you can also invest in gold bars through a precious metals IRA.

Tangible and Easily Accessible

Tangible investments provide peace of mind because they will be there for you no matter what happens in the market. You will always own your gold bars until you sell them if you store them safely.

Gold bars offer a straightforward approach to investing in precious metals. You do not have to think about value. You simply purchase the weight and number of bars you can afford.

Unlike stock market investments, which are sometimes highly complex, investing in gold bars is simple. Buy the number of bars you want and watch as they grow in value based on the spot price. Once you decide to sell, gold bars are highly liquid.

Cons

Although gold bar investments are among the best options, especially for new investors or those who want to keep things simple, these investments have a few cons. Explore the cons below to weigh your options.

No Collectability

For the most part, there is little collectability in gold bars. Although some gold bar manufacturers offer unique designs and markings, gold bars are not collectible like gold coins.

Most people who invest in gold bars are not looking for collectability but value. You want to know whether your investment will pay off in the long run and offer wealth protection. Those who enjoy collecting should consider diversifying their investment portfolio with precious metal coins.

Counterfeit Bar Risks

There is always a risk you could purchase counterfeit gold bars, especially if you do not know what to look for when shopping. Fraudsters regularly try to infiltrate the market with fake gold bars, and their efforts are improving. It can sometimes become difficult to tell the real from the fake.

We urge you to carry a small magnet when shopping for gold bars. Pure gold will not respond to a magnet. If the bar responds, or the markings are incorrect, look elsewhere and do not trust the seller.

Storage and Insurance Fees

There is also another downside to investing in gold bars. You must select a secure place to store your gold and insurance coverage annually to protect against theft.

Most people investing in gold bars rely on secure depositories for storage. For a single annual fee, your gold bars will be protected with the most advanced technology and billion-dollar insurance policies.

You can choose allocated or unallocated storage options at most depositories. Allocated storage means you will get back your exact gold bars when you withdraw them. Unallocated is less expensive but will only give you the same type of bars but not your exact ones.

IRS Reporting and Taxes

Many people do not want the government snooping in their business, but investing in gold puts you in their sights. You must report large purchases of gold bars and any capital gains because you will owe taxes on these investments.

Most people invest in a gold IRA when purchasing bars because it gives them tax advantages that can help reduce their tax bills. Make sure to follow the IRS rules to avoid any tax penalties.

Are Gold Bars Worth Investing In?

Most people turn to investing in gold bars because they offer investment portfolio diversification. Gold bars typically do not correlate with the stock market, making them an attractive addition to your investment strategy.

Although gold is the most popular choice among investors purchasing bars, other options exist, including silver, platinum, and palladium. Beginners often prefer gold bar investments because they do not have to work through a broker like when investing in stocks.

Gold bars are also worth the investment because they do not have as high a premium as coins. It takes much less work for companies to mint gold bars because they lack design imprints, so you will not see the extravagant markups you do with many precious metal coins.

Tips for Getting Started with Your Gold Bar Investments

Are Gold Bars a Good Investment Choice for You?

Researching your investment options becomes critical as your interest in wealth protection grows. Gold bars are one of the most accessible options and are more affordable than others because they do not have a high markup.

If you are considering investing in gold bars, choose a reputable dealer offering superior customer service, guidance, and the highest quality and purity. With the above tips, you can purchase gold confidently, not worrying about your investment value for the future.

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