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Gold bars and coins in front of a screen with trading charts

 

Investing in pure 24-karat gold can be a wise financial decision for many traders and investors. With its intrinsic value and global appeal, 24k gold is a stable store of wealth that holds up even during economic uncertainty. 

In this article, we’ll explore the top situations where investing in pure 24-karat gold makes the most sense and provide tips for maximizing your investment.

 

Diversifying Your Portfolio

Adding an allocation of 24k gold can bring welcome diversification to your portfolio. With its negative correlation to many other asset classes like stocks and bonds, gold offers a way to hedge against downturns in the broader financial markets. 

The pure 24k form, in particular, offers maximum exposure to gold prices and minimizes counterparty risks that stem from owning gold derivatives or mining shares.

During periods of high volatility or economic contractions that sink the valuations of stocks, real estate, and other investments, pure 24k gold valuations tend to rise or hold steady. 

The inverse relationship means 24k gold can stabilize a portfolio when other assets decline. A 5% to 10% target allocation is generally recommended for diversification benefits. Rebalancing periodically will ensure your 24k gold exposure does not become too diluted.

 

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Hedging Against Inflation

Investing in pure 24-karat gold can also provide an inflation hedge and help protect your purchasing power over time. 

As a tangible asset with inherent value, 24k gold tends to maintain its worth even as inflation causes the prices of consumer goods, services, and currencies to rise over the long term. This is especially true during periods of hyperinflation, where double-digit annual price increases rapidly erode the purchasing power of cash savings and fixed-income assets.

Owning physical 24k gold bars or coins ensures you hold an asset denominated in a gold purity value rather than inflated fiat currency. 

As the money supply expands and inflation rises, 24k gold ownership allows you to preserve wealth rather than losing purchasing power in cash. This makes 24k gold a wise choice for conservative investors looking to sustain their lifestyle.

 

Long-Term Savings Vehicle

 

An hourglass releasing a steady stream of gold coins

 

The stability and enduring value of 24-karat gold also make it an excellent vehicle for conservative long-term savings goals like retirement or passing on an inheritance. 

Because pure 24-karat gold maintains its inflation-adjusted value over many decades, it offers confidence that your money will hold its purchasing power over a lifetime of savings. This contrasts with assets like stocks or real estate, which have more considerable risks over long time horizons.

Owning physical 24k gold is especially helpful for meeting multi-decade savings goals since you avoid the counterparty risks of derivatives, ETFs, or certificates. With direct ownership of 24k coins and bars kept in a secure location, you have a tangible asset that maintains its worth through any market environment. 

 

Capital Preservation During Market Spikes

Throughout history, market spikes, panics, and manias have proven that 24k gold helps preserve capital when other risk assets decline rapidly. 

During these stressful times, holding an allocation to pure 24-karat gold serves as both portfolio insurance and a source of ready liquidity. The surge in gold buying that often occurs during market panics demonstrates its trusted status as a haven asset.

Having a stake in physical 24k gold bars or coins means you have an asset that can be easily traded even when volatility temporarily seizes up other markets. This liquidity allows you to wait out frenzied selloffs until cooler heads prevail. 

With turmoil often creating exceptional buying opportunities in distressed assets, the liquidity and stability of 24k gold ownership enable you to be opportunistic during pockets of market mania.

 

Portfolio Anchor Post-Retirement

Retiring requires a portfolio shift from return-seeking growth assets to wealth preservation. Pure 24-karat gold is important for retirees as an asset class with low volatility and negatively correlates to paper assets like stocks and bonds.

Owning physical 24k gold provides security, liquidity, and stability for generating retirement income.

With many retirees having a set timeframe of 20-30 years to fund their investment portfolio, holding a scaling allocation to 24k gold helps ensure this wealth lasts. By providing steady valuations and a hedge against inflation, 24k gold can anchor a retirement portfolio through periods of market losses and rising prices. 

Given its role as a stabilizer and store of value, allocating 10-20% to physical 24k gold is wise for retirees.

 

Wealth Transfer to Heirs

 

Shadow of a family showing a mother and father holding their kid

 

For investors prioritizing preserving wealth across generations, physical 24k gold is an ideal asset to gift heirs and descendants. With its near-perpetual shelf life and globally valued purity content, 24k gold makes a tax-advantaged inheritance to transfer. 

Compared to cash or financial assets, physical 24k gold bars and coins involve no counterparty risk and retain their intrinsic worth over decades.

Gifted 24k gold becomes a lasting legacy asset for beneficiaries. They can hold the 24k gold through their lifetimes, taking comfort in its steadfast value. Heirs also have the option to liquidate some or all of the inherited 24k gold any time they wish to raise funds for large purchases or needs. 

Regardless of timing, the 24-karat gold will maintain its precious metal content. This makes 24k gold a thoughtful inheritance gift.

 

Geopolitical Upheaval Hedge

Investing in 24k gold bullion also provides security during heightened geopolitical tensions or military conflicts. Physical gold ownership becomes especially sought after when global unrest raises questions about the stability of currencies and national bonds. 

Owning 24-karat gold coins and bars ensures you hold internationally respected money without relying on government or central bank policy. This strategy holds for investors residing in nations experiencing domestic turmoil and foreign investors hedging international conflicts. 

Because it functions as a universal store of value, physically allocated 24-karat gold offers protection when national currencies, equities, and treasuries are at risk during geopolitical strife. Maintaining even a minor share of a portfolio in 24k gold can provide critical reassurance.

Find insights in this article: Geopolitical Events And Their Impact On Commodities Prices

 

In a Nutshell

As you evaluate situations where exposure to pure 24-karat gold makes sense, keep in mind the gold’s history as the asset that has most reliably maintained its purchasing power over time. 

Investors worldwide recognize gold as the definitive safe-haven asset to buy in times of market turmoil and economic stress when the value of nearly every other asset declines. Owning 24k physical gold directly gives you pure exposure that is not dependent on any financial institution.

Whether you are an experienced trader or an investing beginner, exposure to real physical 24k gold has potential upsides for your investment portfolio and long-term savings goals. 

As discussed throughout this article, pure 24-karat gold can stabilize and optimize a portfolio through its roles as a diversifier, inflation hedge, long-term store of value, market crisis protector, retirement portfolio anchor, generational wealth transfer vehicle, and geopolitical conflict hedge. 

With so many reasons to invest in 24-karat gold, serious investors should give it a closer look.

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“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”

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