Investing in Gold vs Stocks

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Last Updated: March 28, 2024

As you begin preparing for retirement, you have many options for investments. You are likely worried about your current retirement accounts, including your 401K. Are they dwindling?

Diversification is the best way to protect against losing it all in a stock market crash. Precious metals, particularly, offer an inflation hedge.

With so many options for physical gold and stock available, which is the best? Will you end up with a greater ROI buying stock, or should you purchase physical precious metals?

We are here to unlock the facts and help you decide for yourself. Which will it be for your investment portfolio? Physical gold or gold stocks?

What Should You Know About Stock Investment Options?

Stocks are liquid assets, meaning you can liquidate them on the stock market without trouble. When you buy gold stocks from a company, you are putting your money into that company and expecting a return on your gold investment.

The goal is for your investment to compound. Compounding means an investment earns a return. The greater the return, the more valuable your stock.

Gold stocks are becoming increasingly popular because gold is less volatile than other commodities, so it retains its value even when fiat currencies begin to drop. When buying gold stocks, you don't have to worry about storing precious metals or dealing with the costs of account management.

Many are turning to gold stocks to get away from riskier options. Your goal should be to increase the value of your retirement accounts, and buying mining stock is one way to achieve that goal.

Top 3 Gold & Silver Companies in 2024

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Goldco
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American Hartford Gold
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Augusta Precious Metals
Earned best overall gold IRA company of 2022 by Investopedia's most transparent.

Options for Investing in Gold Stocks

Learning about the gold stock options available to income investors is essential. Do not wait for an economic crisis to take action. Diversify now for the best results. The following are some of the top ways to buy precious metal options through stock purchases. Don't be afraid to think outside the box to gain exposure to the stock market.

Gold Mining Stock

Perhaps one of the most popular is gold mining stocks. You can purchase gold mining stocks personally or through your self-directed IRA. These offer their own benefits that help you diversify your investment portfolio.

If you want to avoid buying gold physically, gold mining stocks are an excellent way to gain exposure. Gold mining stocks are not without their risks. Many investors make the mistake of avoiding vetting the companies.

Research the track record of the gold mining company. Make sure it is an investment that will pay off well and help you establish wealth. Remember, if the mining company falls, you lose your investment, so choose wisely.

Gold Exchange-Traded Funds

Gold ETF is another option for protecting against inflation. If your money is spread across multiple commodities, you are less likely to lose it all in a single economic event. You will not own any tangible gold when you purchase an ETF.

Gold ETF investments allow you to buy investments backed with gold. If you don't have much money, buying gold ETFs is beneficial. Gold ETFs are more flexible than other options for investors and allow for diversification without worrying about inflation.

Gold Certificates

Many like to consider gold certificates a hybrid of sorts. These are not gold stocks but will allow you to pursue gold without storage issues.

Gold certificates have been around for a long time but have decreased in popularity over the years because the United States is no longer under the Gold Standard. Some companies still offer gold certificates, but they are more challenging to find than ETFs and stocks. If the company selling the certificate goes under, you lose money, so keep this in mind.

Pros & Cons of Investing in Gold Stocks with the Current Gold Prices

No investment option is perfect, no matter the kind. There are always going to be pros and cons in any investment, including mining stocks. Think about the following before you invest in the stock market.

Advantages

Disadvantages

What Should You Know About Investing in Physical Gold Bullion?

Many people compare their options between stocks and physical gold and choose to invest in physical options. If you decide on physical gold for an IRA, you will need a third-party depository to get started.

A physical gold investment diversifies your investment portfolio, pulling you away from having all your assets tied up in the stock market. Purchasing gold is straightforward and pays off handsomely.

Options for Investing in Precious Metals

If you buy physical gold, you will need to learn about the options. We invite you to discover the options below. Always remember to keep up with the current gold prices before purchasing gold bullion.

Coins

Coins are the most popular option for investing in gold. If you are investing in physical gold for an IRA, you need to know the IRS rules for purity. For instance, gold must be 99.5%, silver must be 99.9%, and silver and palladium must be 99.95%.

Although you can store your coins at home, outside of an IRA, we advise against this. You should at least store your gold coins in a safety deposit box.

Bars

You can also purchase gold bars. Gold bars allow you to diversify your investments based on watching the price of gold. You can purchase gold bars inside or outside of a gold IRA. Gold bars purchased for IRAs must be stamped with precise weight.

Rounds

Gold rounds are always made from pure metals, whereas coins can be made of mixed metals. The price of gold is based on purity levels and will determine your final cost.

Coins are produced by government mints and are legal tender. Although rounds may look just like gold coins, they are produced by private mints and are not legal tender. Rounds are not backed by the Federal Reserve.

Pros & Cons of Investing in Physical Gold

Why should you consider investing in physical gold over gold stocks? Gold is a safe haven investment. Investors flock to purchasing physical gold during times of economic crisis because it acts as an inflation hedge.

Advantages

Disadvantages

FAQ

Gold is a better investment than stocks because this commodity performs well even when the dollar does not. The price of gold remains stable during trying economic times.

There is no better investment than gold. This commodity performs well in all markets and will allow investors to get a great ROI. When you purchase gold, you are investing in the future and hedging against high inflation.

The disadvantages of an investment in gold are the expense and storage concerns. Storing your gold at home can lead to risks of theft. Investors should always store their gold in a safe depository.

It is still smart to invest in gold. Whether you invest in gold or silver stock or tangible gold, precious metals give you a high return on investment.

Physical Gold Offers Greater Benefit Over the Stock Market

When comparing physical gold to stock, we say buy physical gold. Investors flock to physical gold options when the dollar value drops. Even though physical gold does not pay dividends, it is still worth more. Now is a great time to get started pursuing precious metals to diversify your portfolio.

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Best Overall
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Bar Code Score Card ™

5/5
Goldco
Excellent customer service from precious metals experts.
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9.4

Bar Code Score Card ™

5/5
American Hartford Gold
5 Star customer service, easy to work with, and a low price guarantee.
Best For Education
8.9

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4.5/5
Augusta Precious Metals
Earned best overall gold IRA company of 2022 by Investopedia's most transparent.
4
7.9

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4/5
Birch Gold
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Noble Gold
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