Gold prices dropped in the initial days of the pandemic. Then, they rocketed to new heights. The 2008 economic crisis saw the same thing. Gold and other precious metals, like silver, have been considered a great hedge against inflation and economic crisis/recessions for decades. Gold has seen an average gain of 8% each year since 1970.

If you have some gold that you are using as an investment, I suggest it be and not stored in a safe/box in the bedroom. This article assumes that the gold you have is pure gold (999 or 24K) and has gold purity certificates. These certificates guarantee purity/value. Jewelry such as gold bangles and rings have lower purity levels than 14K or 18, and generally have a lower resale price than “used gold jewellery”.

These are the main reasons that buying physical gold is a bad idea.

1. It can be difficult to sell and buy

It is tempting, I know. It’s very reassuring to feel, smell, and taste the benefits of an investment.

There are several ways to purchase pure physical gold. These include gold bars and bullion coins. You can also buy collectibles at banks or jewellery shops. But, unlike digital assets such as stocks, selling and buying gold can be tedious.

Maybe the pandemic made me lazy, but it isn’t appealing to think about going to the bank and waiting in line to purchase gold. Selling is even more difficult because there are so many checks and safeguards.

For example, with the UOB, bars or coins made of gold must be in good order (determined by bank), seal must still be intact and original invoices must still be valid for resale. Due to the rapid rise in gold prices, cases of counterfeit coins and bars have increased significantly over the past decade.

2. Storage and security

Precious items such as gold should be secured under lock and key to prevent theft. A reliable and good safe will ensure that this doesn’t happen.

This means that you will need to spend a lot of money on a safe high quality to protect your gold. You now have another thing to protect: the safe itself. As an additional protection against theft or accidents to your safe and the precious physical gold within, you can also purchase insurance. Yes, it is expensive.

Should I still purchase gold?

Yes! Only and not actual gold. Gold is a reliable way to protect wealth and hedge against market volatility. These are some great alternatives to gold paper:

  • ETFs for gold. Buying an exchange traded fund (ETF) is the easiest way to have gold. The SPDR gold shares ETF, for example, is the most physically backed ETF of gold. The funds can be used to purchase physical gold that is locked up in vaults. This is far safer than your $300 safe at the home. ETF prices are compared to gold bullion’s price, which gives investors easy access to gold prices and allows them to trade the ETFs. The ETF can be traded on an exchange so you can buy and sell units just like you would stocks.
  • You can still buy gold locally from licensed dealers or banks by purchasing gold certificates. These certificates are typically sold in kilobars (1, 000g) — although they can be exchanged for physical gold or cash when needed. There are annual charges that you should consider.
  • Save gold with a savings account. Now you can buy gold online without having to physically deliver it. Your gold account transactions and holdings are not measured in dollars or cents. Instead, they are measured in grams. The account is subject to a service fee (UOB charges 0.25 p.a. .

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