Gold bars and coins are a smart bet right now. Here's why.

While gold may not be the first thing that comes to mind when you think about investing, this precious metal can be a valuable addition to nearly any portfolio. That's because it offers a wide range of benefits to investors, from preserving purchasing power when inflation is high to offering easy liquidity. Gold also tends to keep its value in any economy, which only adds to the allure.

And, if you're thinking about adding this precious metal to your portfolio, you have numerous types of gold investments to choose from. Gold stocks, gold ETFs, gold futures and even gold IRAs are all options to consider — and each comes with its own potential benefits and downsides. 

Physical gold, like gold bars and coins, is another option. And right now, this type of gold investment could be one of the smartest additions you can make to your portfolio. 

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Why gold bars and coins are a smart bet right now

Here are a few reasons you may want to consider adding gold bars or coins to your portfolio today.

Inflation is still high

One of the most significant factors driving investors toward gold coins and bars is the concern over rising inflation. Inflation erodes the purchasing power of fiat currency, making it less valuable over time. This situation has made holding assets that retain their value a prudent choice.

That's where gold can come in. Gold has historically acted as a hedge against inflation. Unlike paper currencies, its value tends to rise when inflation is high — which is why investors turn to physical gold to preserve their wealth and purchasing power at times when traditional investments struggle to keep up.

And, right now, we're still facing issues with inflation, so it's a good time to add gold bars and coins to your portfolio. While the Federal Reserve's numerous rate hikes since March 2022 appeared to be cooling the inflation rate, it ticked back up again in July — and it's unclear where it may head in the future.

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Gold spot prices are down

While gold has a history of performing well during times of economic uncertainty, it can be smart to strike when the iron is hot. And, that time may be now. Gold spot prices are currently lower than they have been in recent months, presenting a favorable buying opportunity for investors.

Lower prices for gold bars and coins mean that investors can acquire more physical gold for their money. This not only allows for a lower entry point, but also offers the potential for greater returns when gold prices eventually rebound, which is often the case during times of economic turbulence.

The economic outlook is uncertain

The economic landscape remains fraught with uncertainty. Geopolitical tensions, trade disputes and other factors — like concerns about economic downturns and the high inflation environment — have created a climate of unpredictability. In these uncertain times, investors may want to seek out assets that have historically provided stability.

And, that's what gold bars and coins can provide. Gold has a reputation as a safe-haven asset, meaning that it tends to perform well when other investment classes, such as stocks and bonds, face headwinds. In turn, it can be smart to turn to gold as a store of value and a way to mitigate risk during periods of economic uncertainty or turmoil.

Portfolio diversification is necessary

Diversifying your investment portfolio is a fundamental principle of risk management. Holding a mix of assets with different risk profiles can help cushion the impact of market fluctuations. And, gold is an excellent choice for diversification due to its low correlation with other asset classes like stocks and bonds.

By including gold bars and coins in your investment portfolio, you can reduce overall risk and enhance its resilience. When other investments suffer, gold often holds or even increases its value, providing a counterbalance to your portfolio's performance.

The bottom line

Gold bars and coins can be a smart investment option in the face of high inflation, an uncertain economic outlook and volatile markets. While past performance is not indicative of future results, gold's historical role as a store of value and hedge against inflation makes it a compelling choice for investors who want to protect and grow their wealth during uncertain times. 

However, it's essential to remember that gold is not without its risks, and its value can also fluctuate. Before adding gold to your investment portfolio, be sure to determine the appropriate allocation based on your financial goals and risk tolerance. With the right strategy and a well-diversified portfolio, gold can play a valuable role in helping you weather economic uncertainty.