Are 1-ounce gold bars a safe investment this June?
As the nation continues to grapple with high and persistent inflation, elevated interest rates, geopolitical tensions and other uncertainties, many investors are turning to gold to protect their portfolios. And that makes sense, as the precious metal's intrinsic value and scarcity have historically made it a reliable hedge against inflation and other economic issues. And, as more investors flock to gold, the uptick in demand has been causing the price of gold to skyrocket.
While gold's price was hovering at just below $2,000 per ounce in mid-February, the renewed interest in gold caused the price to hit a new record high of over $2,400 per ounce by late May, which was a big win for investors who bought in when the price was dipping. The price of gold has gold has cooled a bit in the time since, but it is currently sitting at $2,342.92 per ounce (as of June 3, 2024). And, today's high price, coupled with gold's recent upward price trajectory, continues to be a major draw for both new and seasoned investors.
But while gold can be an attractive option to consider, especially when the price is climbing, it's important to note that its price can fluctuate, sometimes significantly, in the short term. And if you want to maximize the potential returns on your gold investment, it's crucial to ensure that you're making a safe and well-informed bet. So, are 1-ounce gold bars, which are one of the most affordable and accessible gold bullion options, a safe investment this June? Let's find out.
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Are 1-ounce gold bars a safe investment this June?
Whether or not 1-ounce gold bars are ultimately the right asset to add to your investment portfolio depends on a wide range of factors, like your investment goals and asset mix. That said, in most cases, the answer to whether 1-ounce gold bars are a safe investment in June is yes — but with a few important caveats to consider.
One of the main reasons gold may be a safe investment this June is that gold has historically been a reliable long-term investment. If you look at the price trajectory of gold over the past five decades, the price has fluctuated over the shorter term but has consistently risen over the long term, outpacing inflation and providing a buffer against economic uncertainties. And, gold has held its value, even during periods of market volatility, making it an attractive option for investors seeking stability and security.
1-ounce gold bars also offer several advantages that make them a compelling investment choice. For example, their smaller size and lower price point compared to larger gold bars make them more accessible to a broader range of investors, allowing for portfolio diversification without requiring a significant upfront capital outlay. These bars are also widely recognized and easily tradable, ensuring liquidity when the need arises.
However, it's important to note that while 1-ounce gold bars can be a valuable addition to a well-diversified portfolio, it should not be the sole investment strategy for any investor. After all, gold does not generate dividends like some other assets do, and its value is primarily driven by supply and demand dynamics.
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How to decide if 1-ounce gold bars are right for your portfolio
To decide if 1-ounce gold bars are right for your portfolio this June, consider the following factors:
Your investment horizon
Gold is generally considered a long-term investment, as the price can be volatile in the short term based on demand and other factors. So, if you have a shorter investment horizon or immediate liquidity needs, 1-ounce gold bars may not be the most suitable option.
Your risk tolerance
As noted, gold can be subject to price fluctuations, so it's essential to assess your risk tolerance and ensure that you're comfortable with the potential volatility. If you have a lower risk tolerance, you may want to allocate a smaller portion of your portfolio to 1-ounce gold bars (or any other gold investment you make).
Your diversification needs
Gold can help to reduce the overall risk of your portfolio by providing a hedge against inflation and market downturns. So, if your portfolio is heavily weighted toward traditional assets like stocks and bonds, adding 1-ounce gold bars to the mix can help balance your risk exposure.
The storage and security costs
Physical gold, whether it's 1-ounce gold bars, larger gold bars or fractional gold, requires proper storage and security measures, which can incur additional costs. Consider these factors when evaluating the overall investment expense and ensure that you have a secure location to store your gold bars.
The potential tax implications
There may be tax implications associated with buying and selling physical gold. So, be aware of these potential tax liabilities and factor them into your investment decision before buying 1-ounce gold bars (or any other type of physical gold bullion).
The bottom line
For those seeking a safe haven and long-term stability, 1-ounce gold bars can be a valuable addition to a well-diversified portfolio this June — but these types of gold bars won't be the right move for everyone. To decide if 1-ounce gold bars make sense for your portfolio, it may help to weigh your investment objectives, risk tolerance and overall financial strategy. That way, you can make an informed decision on whether these compact bullion bars align with your investment goals and provide the protection and growth potential you seek.
