How to Make Physical Gold Investments

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Investors are keenly aware of how stocks and bonds react during various economic times. They'll see both types of assets move up and down in value in the hopes of achieving an overall positive return. Setbacks do occur, however, when the economy takes a downturn.

Investors look to tangible assets, including physical gold, to support their retirement savings.

Keep reading to learn more about how to make physical gold investments as investors round out their portfolios. 

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Digging into Different Physical Gold Investment Products

Investing in gold is a time-honored tradition that dates back farther than the oldest bank. Physical gold has been traded for generations. It has real value as opposed to the face value of a fiat currency. As a result, gold retains its value in most economic conditions. It's even known to rise in value as long as it's held for a long time. 


Currently, there are two main types of gold investment products. The most obvious one is physical gold. Bullion and coins are the most common forms of physical gold in investors' accounts today. 

Investors also have the choice of holding gold securities, such as stocks in gold mines and other associated areas. Although this investment choice doesn't involve holding actual gold, it is a viable way to enter the gold market.

Looking Through Gold Options

The most recognizable gold investment is the coin. Mints around the world produce these gold coins with attention to purity and design. There are only a few gold coins that can be used for investment purposes too, such as adding them to a precious metals IRA or Individual Retirement Account.

These coins include the American Gold Eagle and Canadian Gold Maple Leaf, for example. There are other coins, such as those from Australia or South Africa, that can be used for investment and tax incentives too.

Discovering Gold IRAs

Investors should note that not all gold is considered a retirement investment. Collector coins and gold jewelry, for instance, are interesting additions to a collection. They cannot, however, be used as traditional investments.

Other gold options involve bulk precious metals or bullion. Investors can purchase bars, rounds, or ingots. These investments are highly attractive because they're available in several different weights. As a result, investors can add as little or as much gold as they desire to their retirement fund. 

Bullion also has a specific purity level, which should be marked on each item. Investors will know immediately that they have a valuable gold asset with these details.

Exploring Gold Advantages

The majority of mainstream investments rely on a stable and growing stock market. When the economy has a downturn, most investments drop in value. In contrast, physical gold isn't tied to the stock market. It relies on intrinsic value, not face value. As a result, physical gold can rise in value when the economy at large is struggling.

In addition, physical gold is another resource to hedge against inflation. The dollar only has a desirable value when average to strong economic conditions are in play.

On the other hand, physical gold always has a value based on purity, weight, and other factors. If inflation significantly impacts investors' paper assets, physical gold can partially support a retirement fund in the meantime.

Physical gold as an investment tool cannot be erased, digitally altered, or manipulated on a virtual level. It's a tangible item secured in a vault. Unless a catastrophe occurs, gold will retain its shape and value.

Investors who're concerned about global markets and their future value can benefit from physical gold investments. If a catastrophe does occur in the world's economy, gold can be traded, exchanged, and used in other ways to support an investor's interests. This resource harks back to a time when currency didn't exist and valuable items were used to "buy" essentials. 

Lastly, physical gold is advantageous because it can be passed down to heirs. In fact, it can be held for generations if desired. Paper assets don't often have this longevity.

Knowing About Gold Disadvantages

Any investment will have its disadvantages, including gold. Investors might compare paper assets to tangible products like gold, for example. Dollars don't have to be physically stored. They're merely a digital value on the computer screen.

In contrast, gold must be stored. Ideally, it should be stored at a depository that's secured 24 hours a day. Some investors might store the gold at home in a safe too.

Regardless of the gold's location, there are inherent costs associated with each investment type. At-home investments require safe and possible security camera installations. The investor must safeguard the assets at a private residence.

On the other hand, depositories charge investors a certain percentage based on the gold volume stored at their facilities each year. Securing gold in any scenario will always cost more than paper assets.

A critical detail often misunderstood about gold investments is the lack of dividends. This asset doesn't create dividends for the investor like a stock or bond, for instance. The gold's return for the investor comes when it's sold in later years.

Its value should have hopefully risen since its initial purchase. For some investors accustomed to seeing dividends add up with their paper assets, gold is a stark change of pace. 

Another disadvantage to gold investments is the selling process. It takes time to find a dealer, strike a deal and ship the precious metals out to the buyer. Payment is only distributed when the dealer receives and verifies the shipment's quality. Stocks and bonds, in contrast, can be bought and sold in only a few minutes.

Analyzing Gold Securities

If investors are unsure of physical gold purchases, they may be interested in securities. These products are paper assets, but they're directly connected to the gold industry. 

ETFs or Exchange-Traded Funds are a mixture of commodities, stocks, and bonds. They're directly related to the current price of gold. In short, as gold prices rise, then the ETF gains value. Investors are welcome to buy, sell and trade these funds just like any other stock market product.

Gold stocks are another variation on investing in precious metals without storing the physical gold at home or in a depository. These stocks partially base their value on gold, but the majority of returns come from the value of a company associated with that fund.

For example, investors might buy a gold mining company's stock or refinery business. These gold stocks will fluctuate with the stock market as both the precious metals and businesses thrive.

For more advanced investors, consider gold futures. These paper assets involve betting on when gold might be rising in value. Purchase an option, and sell it at the right time to make a profit. These investments, however, require a solid understanding of the market and its movements. Investors who're interested in gold securities often choose stocks or ETFs over futures.

Reading About Gold Securities Advantages

One of the biggest advantages of gold securities is the cost. Investors who're just starting their nest eggs may not have a lot of available funds. They cannot buy several ounces of physical gold, for example. Securities give investors the chance to buy shares that are equal to less than an ounce.

The invested amount might be as small as 1/10th of an ounce of gold. This amount may be small, but it can gain significant value in time.

Investors also have the option of selling their securities at any time. It's not necessary to negotiate, package, and ship these gold investments. Their transactions are similar to stocks and bonds.

In addition, investors don't incur any storage costs with securities. These investments bring gold into a portfolio without any extra effort.

Unlike physical gold, these securities offer dividends. This fact is often the deciding factor for investors who aren't sure about either physical gold or securities purchases. Dividends compound over time, which is always a desirable trait in retirement planning.

Understanding Gold Securities Disadvantages

Certain disadvantages are unique to gold securities. Many stocks and bonds are associated with a gold mining company, for instance. Naturally, these companies operate in areas of the world where gold can be found.

Investors must understand that these companies may be influenced by their country of origin, including economic downturns and political instability. The price of gold may be up, but a particular company could have troubles. Researching each security before investing in it is highly recommended.

Additionally, gold mining companies tend to have shifting costs. Labor, equipment, and other factors can significantly rise at times. As a result, gold securities might lose value. Investors must consider these scenarios as they diversify a portfolio.

A final disadvantage involves physical ownership. Investors won't own physical gold with securities. They're merely associating themselves with gold by way of investing in the business side. Depending on investors' goals, this fact may or may not be attractive.

Weighing Investor Options

There are many factors to consider as a potential investor in gold. Every product has some risk. There's no guarantee of any returns, which is true of any investment venture. However, investors should always have the goal of diversifying in mind.

It's reasonable to invest up to 10 percent of a retirement portfolio in gold. Although this amount is a small fraction, it can boost the rest of the holdings during troubling times. Many investors are concerned about global market problems on a large, if not, catastrophic level. It's reassuring to have physical gold stored away for peace of mind. 

Investing a large percentage of investors' retirement funds in gold is usually frowned upon. When there's a strong mixture of different assets in a single portfolio, it can make a strong rate of return. A comfortable retirement is the ultimate goal.

Learning About Gold IRAs

One of the best ways to invest in physical gold is by funding a gold IRA. These accounts operate similarly to traditional IRAs. There are tax incentives especially if investors fund the gold IRA with 401(k) money. Exploring how to activate a gold IRA is the next step.

Initially, speak with an IRA custodian who specializes in gold or precious metals IRAs. This individual works with the investor on every transaction. The investor isn't allowed to perform any account management. The custodian purchases the physical gold on behalf of the investor, for example.

Gold IRA

Subsequently, the assets ship from a mint or other dealer to an IRS-approved depository. The physical gold remains secure at the depository until it's withdrawn during retirement.

The custodian is necessary so that the funding, assets, and depository are all legitimate ventures. For example, the custodian points out the IRS-approved physical gold that investors can select for the account. No other types of physical gold can be secured at the depository. Investors choose among various coins and bars for their gold IRA.

There are only a few depositories designed for gold IRA accounts too. Investors' custodians can activate these accounts to complete the setup. With a gold IRA in place, investors are welcome to add to the account at any time. They simply contact the custodian with the transaction information.

Investors should be aware of gold IRA fees before starting an account. It's not uncommon to have an account setup, maintenance, and bank wire fees. The depository should charge for storage, insurance, and maintenance costs as well.

These fees are typical for the industry. Every custodian and depository is different, however, so ask about fee structures beforehand. Some businesses charge more fees than others.


An interesting feature of gold IRAs is the withdrawal choices at retirement age. Investors aren't limited to just selling the gold and depositing the resulting money in their checking account. They can physically withdraw the gold and keep it at home.

Many investors like the idea of holding gold at home as a financial security measure. Keep this fact in mind when deciding on retirement income channels. Liquidating some of the gold and keeping the rest of the assets at home can be a smart way to support several generations of the family.

Investors have several funding options for this new account as well. They can contribute post-tax dollars, or they can opt for a direct rollover from another retirement account. Contributing funds seems like a logical choice, but it does have its drawbacks.

These funds have already been taxed, such as through paycheck deductions. If they're used as gold IRA contributions now, they'll be taxed again upon withdrawing them in retirement.

A rollover is a common choice because there are no taxes due at this point. The investor never takes possession of the 401(k) funds either. They're moved between accounts. In addition, there are essentially no funding limits to a rollover.

Investors can pick nearly any amount they desire. In contrast, the IRS has strict laws about contribution limits. Currently, IRA contributions are set at a maximum of $6,500 per year. If an investor is above the age of 50, there's a $7,500 contribution limit. 

Purchasing physical gold is the start of a more secure future. Find a dealer, set up an account, and keep up with the investments like they were typical stocks and bonds. The physical gold's value may increase over time, which only enhances a retirement fund.

Remember to read our list of the Top Gold Companies.

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