With inflation on the rise and causing various challenges, many investors are seeking alternative investment options, such as gold, to preserve the value of their portfolios. While investing in gold does come with its own set of challenges due to the variety of available options, it offers unique benefits to many people.

Throughout history, gold has been a reliable investment during times of inflation, economic instability, and even war. Today, a growing number of investors are turning to gold to safeguard their wealth.

Investing in gold isn't limited to physical gold, such as bars or coins. You can also invest in gold through exchange-traded funds (ETFs) that are now widely available through many investment companies. In this article, we’ll guide you through everything a beginner needs to know about gold and how to start investing in it.

How to Invest in Gold?

There are several ways you can invest in gold and build the wealth you’re aiming for. However, before you start, it's important to have a clear investment strategy and ensure it aligns with your goals and risk tolerance.

What Are the Best Ways to Invest in Gold?

1- Gold Bars

When most people think about investing in gold, the first thing that comes to mind is buying large gold bars that they can store in a safe, either at home or in a bank. Gold bars come in various sizes and weights, ranging from 1 gram to 100 grams. Given the high price of gold, this type of investment can be quite costly.

Due to the high cost, it’s essential to buy from a trusted dealer or jeweler and ensure your gold is secure. You might want to rent a bank vault to store your gold bars safely. If you decide to invest in gold bars, it's also a good idea to keep an eye on gold prices, so you can buy at the right time, as gold prices fluctuate regularly.

2- Gold Coins

Gold coins, such as sovereigns or Krugerrands, come in different weights, including 1/16, 1/8, 1/4, 1/2, and a full coin. Some coins can even come in sets of five. These coins are typically made from 22k or 24k gold. If you have smaller savings, investing in gold coins might be a better option than small gold bars, which often carry higher fees for minting and craftsmanship.

If you have a larger budget, it’s more cost-effective to buy larger gold bars, as you’ll receive a better return on your investment.

3- Gold Jewelry

Another option is to invest in gold jewelry that you can wear. However, this type of investment carries more risk compared to raw gold or bars.

First, you need to be very careful when purchasing gold jewelry since not all stores are trustworthy. To avoid scams, it’s crucial to buy your jewelry from a reputable jeweler and obtain all necessary documentation.

Secondly, you'll pay a premium for the craftsmanship and design of the jewelry, which can range from 20% to several times the value of the raw gold. Additionally, make sure you know the purity of the gold in your jewelry, as this affects the resale value. Purity is measured in carats, with 24 carats being pure gold.

4- Gold ETFs

Investing in gold ETFs offers you the opportunity to benefit from the stability of gold over the long term while also enjoying more liquidity and diversification than physical gold. You can also start with smaller amounts and benefit from lower fees, as ETFs often have lower costs compared to physical gold.

ETFs also provide secure storage services, as the gold is stored in regulated financial institutions. This eliminates concerns about theft or damage.

Advantages of Investing in Gold

As one of the most popular precious metals, let’s take a look at the key advantages of gold investments:

• Diversification: Adding gold to your investment portfolio can help diversify your assets, reducing overall risk. Having a mix of different asset types, currencies, and other elements can help protect against volatility.
• Liquidity: Gold is generally highly liquid, meaning you can buy and sell it quickly without much delay. The liquidity, however, varies depending on the type of gold product you hold.
• Preservation of Purchasing Power: Compared to other assets, like cash, gold often retains its value over time, making it a reliable store of wealth.

Disadvantages of Investing in Gold

Every investment has its pros and cons, and gold is no different. Here are some of the downsides:

• Price Volatility: While gold tends to hold its value long-term, its short-term price movements can be volatile.
• Risks: Although many consider gold a safe investment, all investments carry some level of risk.

Tips for Investing in Gold

1- Stick to Standard Investments:

Standard gold investments, such as gold bars or ETFs, come with specific purity levels. For example, investment-grade gold bars must contain at least 99.5% pure gold, ensuring you know exactly what you’re buying.

If you purchase non-standard items, such as jewelry or rare coins, it may be more difficult to evaluate the actual gold content. Additionally, jewelers charge extra for their designs, so less of your money goes into the gold itself.

2- Buy from Trusted Dealers:

Always purchase your gold from reputable dealers. While you can find gold for sale online, the risk of overpaying or getting scammed is higher. It's safer to buy from a dealer or jeweler that has an established reputation.

3- Consult a Financial Advisor:

Before making any changes to your investment portfolio, it's a good idea to consult a financial advisor. They can provide impartial advice on whether gold is a good fit for your portfolio, as opposed to the sales pitch you might get from gold sellers.

Should You Invest in Gold?

Finally, the big question: should you invest in gold?

If you're concerned about inflation or economic instability, gold can be a good safe-haven investment. While it can be volatile in the short term, it tends to hold its value over the long run. Whether you choose to invest in physical gold, gold stocks, or gold ETFs, most financial experts recommend allocating no more than 10% of your portfolio to gold.

While every investment carries some risk, the unique nature of the gold market makes it tricky to navigate, and it takes time to learn. For most investors, gold ETFs offer the safest and most convenient way to add gold to their portfolio.