Who Should Invest in Gold?

David from Scotland asks “Who Should Invest in Gold?” – a question that’s as broad as it is deep!

Bullion.Directory’s Ask Ally Service
By Alison Macdonald
Commercial Editor at Bullion.Directory

I’m going to be generalizing a lot here looking at typicals and averages, but for most of the following examples these reasons hold about as much weight as any. Of course how MUCH someone is looking to invest and how much their overall availability of funds stands at will have an impact too.

Too little an investment won’t make the slightest difference in anyone’s lives other than having something pretty to hold, or to act as a dinner party conversation starter during quiet awkward silences. Gold only really comes into it’s own when an investor has 5 figures to spend, more so at 6 and at 7 figures we’re into a whole different ballpark.

So looking at averages, and average investments of $25,000 and up, here’s who should at least consider owning some gold…

1. The Risk-Averse Investor

First up, we’ve got the cautious types. If the thought of the stock market’s ups and downs gives you more heebie-jeebies than a scary movie on a dark night, alone, far from civilisation, gold might just be your cup of tea.

Gold is known for its stability. It’s like that reliable friend who’s always there, come rain or shine. When the financial world is doing somersaults (like now) gold tends to stand firm (it’s seeing some record highs.)

So, if playing it safe is your game, gold should be a key player in your portfolio. Depending on your terror levels and overall portfolio size, advisors recommend between 5-20% of overall worth to be held in gold.

2. The Diversification Seeker

Then there are the savvy investors who know not to put all their eggs in one basket.

Diversification isn’t just a buzzword; it’s smart investing. Adding gold to your portfolio is like adding a sprinkle of salt to a meal – it just makes everything better. It diversifies your investments, reducing risk and potentially smoothing out the bumps in the road.

For some, they like to diversify further, and mixing up their precious metals with some silver. Whilst our gold investment return calculator shows this to be a less than perfect strategy over the past 25 years, there are those who swear by it.

3. The Inflation-Wary

If you’re the kind who watches the inflation rate like a hawk, then gold is worth your attention.

Inflation is when the money in your pocket loses it’s buying power. The less stuff you can buy, the worse you’ve been hit by inflation. True inflation is ALWAYS higher than inflation rates, because governments like nothing better than to massage figures to make themselves look good – or at least less bad – but I digress.

As currencies lose their buying power, gold often shines brighter. It’s like an economic life jacket, keeping your wealth afloat when the value of money is sinking.

Our buying power calculator shows you exactly how investments like gold, silver and common stocks have an impact on buying power, versus hiding money under a mattress.

4. The Historically Minded

History buffs, take note. Gold has been a symbol of wealth and security for centuries.

If you’re drawn to assets with a deep-rooted history, then gold is a no-brainer. It’s not just an investment; it’s a piece of human history.

It’s a slippery slope when you start buying ACTUAL historical gold coins, from bitter experience (I’m obsessed with early islamic and asian gold coins and I assure you it’s a costly hobby.)

But if you just like the fact that people have held gold as a store of value for millennia, then gold already has a place in your heart.

5. The Tangible Asset Lover

For those who like to see and touch their investments, gold is a dream come true. Unlike stocks and bonds, which exist mostly in the digital realm, gold is a physical asset.

And of course things that don’t actually exist can become lost, or worthless in seconds. The collapse of FTX recently woke up a lot of crypto investors to this fact. Silicon Valley Bank was an equal shock to lovers of all fine bank stocks.

Holding a gold coin or bar can be an exhilarating experience – it’s real, it’s tangible, and it’s yours. And it will NEVER be worthless.

6. The Crisis Planner

Let’s not forget those who like to be prepared for every eventuality. In times of economic or geopolitical turmoil, gold is often seen as a safe haven – because, well, it IS a safe haven.

When the brown hits the fan, gold rises in value. When it REALLY hits the fan it’s a portable way to bring at least some of your wealth with you as you flee whatever is going on.

It’s the financial equivalent of a sturdy umbrella in a downpour. Or a bullet-proof vest. If you’re the type who likes to be ready for anything, then gold deserves a place in your emergency kit – and if you’re a prepper, gold and silver are your future-world money and the answer to all your barter system prayers.

7. The Long-Term Growth Seeker

If you’re in it for the long haul, gold can be a wise choice. While it doesn’t offer the quick returns of some high-risk investments, it has shown steady growth over the years – averaging a solid 6.85% annual growth over the past 25 years.

It’s like planting a tree – you might not see the benefits immediately, but give it time, and it can grow into something substantial.

Not for nothing that gold is one of the assets used to protect generational wealth far beyond one person’s lifetime – or the asset backing the paper wealth of many nations.

8. The Sentimental Investor

Finally, there’s the sentimental investor. Gold isn’t just a cold, hard asset; it has a certain romance to it.

It’s been treasured by civilizations throughout history, and owning gold can feel like being part of that legacy. Gold is central to so much human culture, as an example being used to symbolize marriage across more than half of the globe.

If you’re drawn to investments that have a story and a bit of magic to them, then gold will speak to your soul.

To close, investing in gold isn’t just for the wealthy or the financial wizards; it’s for anyone looking for stability, diversity, and a touch of history in their portfolio.

From the cautious to the adventurous, the novice to the seasoned pro, gold offers something for everyone. So, whether you’re looking to safeguard your wealth, diversify your portfolio, or simply own a piece of history, gold might just be the investment you’re looking for.

Like a fine Scotch or a good book, it’s something to be savored and appreciated over time.

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