Are 1-ounce gold bars a safe investment this October?

The gold market has experienced tremendous growth throughout 2024, drawing attention from both experienced and new investors. Gold prices began their meteoric rise in early March, reaching $2,160 per ounce — an 8% increase from the previous high set in December 2023. The upward trend continued in the months following, and the price of gold is now closing in on $2,800 per ounce. This sustained price rally has delivered significant returns for those who bought in earlier this year or prior periods. 

The surge in gold prices isn't the only reason investors are flocking to the shiny metal right now, though. Many investors are turning to gold to protect against the uncertain economic environment that's looming. After all, the stability that gold can offer, particularly during periods of market volatility, makes it a popular choice for protecting wealth. However, prices are sitting at historic highs, leaving many potential investors feeling cautious about buying in.

In turn, the question on many investors' minds is whether investing in gold, and specifically in 1-ounce gold bars, is really a safe bet. So are these types of gold bars the right addition to your portfolio this October? Here's what to know.

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Are 1-ounce gold bars a safe investment this October?

Whether 1-ounce gold bars are a smart choice this October depends largely on your investment strategy. In general, though, these types of gold bars continue to offer benefits for many investors. For starters, gold has long been recognized as a safe haven asset, meaning it tends to retain or increase in value during periods of market turbulence, inflation or geopolitical instability. Unlike paper currency, which can be devalued by inflation or government policies, gold has intrinsic value that has stood the test of time. This makes 1-ounce gold bars a reliable option for preserving wealth over the long term.

Another reason 1-ounce gold bars are considered a safe investment in nearly any economic environment is their liquidity. These bars are easily traded in the global market, and their smaller size makes them more accessible to a wide range of investors. So, whether you're a seasoned investor or someone looking to diversify for the first time, 1-ounce bars offer flexibility. If you ever need to sell, they are widely recognized and accepted by dealers, making it easy to convert them back into cash or trade for other assets.

When you buy 1-ounce gold bars, you're also investing in a tangible asset. That differs from investing in assets like stocks or bonds, which are financial instruments tied to market performance. As a result, gold isn't directly impacted by corporate earnings reports, interest rates or political decisions — at least not in the same way traditional securities are. Its value, while subject to market fluctuations, tends to move independently of stocks and bonds, offering a hedge against volatility in other parts of a portfolio. 

Gold is not subject to credit or counterparty risk, either. Owning physical gold, including 1-ounce bars, means you hold a tangible asset in your possession, which is not dependent on a company's solvency or financial performance. This feature makes gold a reliable hedge against potential financial crises where paper assets or digital assets may falter.

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What to consider before buying 1-ounce gold bars

While 1-ounce gold bars are typically a safe bet overall, there are several factors you may want to consider before buying in. One is your investment horizon. Gold is best suited for those with a long-term outlook, and while the price has been rising, the short-term price volatility generally means that those looking for quick gains may be disappointed. If immediate liquidity is a priority, other asset classes may offer more flexibility.

Another important factor is your risk tolerance. While gold tends to rise during periods of uncertainty, its price can still fluctuate, sometimes sharply, over the shorter term. So, investors with a lower risk tolerance might want to allocate just a small portion of their portfolios to gold to mitigate the potential volatility.

For portfolios heavily weighted toward traditional assets like stocks or bonds, adding gold can reduce overall risk by providing a hedge against inflation and market downturns. However, storage and security costs for physical gold should also be factored into the decision, as properly securing gold bars can add to the overall expense and complexity of the investment.

The bottom line

Despite the rising price, 1-ounce gold bars remain a generally safe investment. Their smaller size makes them an accessible option for many investors, allowing for portfolio diversification without a substantial capital outlay. However, it's essential to consider your financial strategy, risk tolerance and long-term goals before diving into gold at its current price levels. Ultimately, 1-ounce gold bars can provide stability and protection within a well-diversified portfolio, but they are not a one-size-fits-all solution. Careful evaluation of the market and your personal financial needs is critical before making any investment decision.