Investing in gold bars and coins: When it's worth it (and when it's not)

The recent economic turmoil caused by high (but now cooling) inflation, back-to-back interest rate hikes and a string of regional bank collapses has taken a toll on many investors' portfolios. In turn, more and more investors are turning to precious metals — and gold in particular — to add stability to their portfolios. 

Gold has always been an attractive investment because of its limited supply and relatively stable value. But in times of economic turmoil, investors tend to flock to this precious metal as a way to diversify their investment portfolios, hedge against inflation and protect against losses from more volatile investments. But when exactly does it make sense to invest in gold bars and coins — and when does it not? 

While investing in physical gold is a smart move in most economic climates, there are times when it may not be worth it. By knowing when it is and isn't worth it to add gold bars and coins to your portfolio, you'll be better prepared to take the plunge into investing in this asset.

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Investing in gold bars and coins: When it's worth it

Here are a few scenarios when it may be worth it to invest in gold bars and coins.

When the economy is unstable or in recession

Gold is seen as a safe-haven asset, and its price can rise when other investments are falling. So, if the stock market is in turmoil or geopolitical (or other) issues are causing economic instability, it's typically a good time to invest in gold bars or coins. 

For example, when the Fed predicted a mild recession earlier this year, the stock market indexes quickly tanked, but gold saw a price increase during that same time, nearly closing in on the price record set in 2020.

When you want to diversify your portfolio

Diversification is key when it comes to sound investment strategies. That's because gold's value tends to have a low correlation to other assets, such as stocks and bonds. 

In other words, when traditional investments are experiencing higher volatility, gold may behave differently, providing a buffer against market downturns. In turn, gold bars and coins can be great diversification tool for balancing out your riskier investments. 

When inflation is high

One of the primary uses of gold investing is as a hedge against inflation. That's because the price of gold tends to rise when the value of paper currency falls. While gold prices may fluctuate in the short term, gold's track record of preserving wealth over the long term makes gold bars and coins a smart addition to most investment portfolios when inflation is high.

When you're looking for a long-term investment

The price of gold is driven by a combination of factors, including global economic conditions, geopolitical tensions and investor sentiment, so it can fluctuate in the short term. In general, though, gold's value tends to grow slowly. 

You'll need some patience and a long-term strategy if you want to see real gains, but if you're looking for a stable investment over teh long run, gold bars and coins can be a solid option.

When it's not worth it

Here's when it might not make sense to add gold bars and coins to your portfolio.

When you want a quick return

While gold prices aren't as volatile as other types of investments, the price of gold still fluctuates due to economic factors like supply and demand. But because the value of gold tends to be stable overall, it can take a while to see sustained price growth. As a result, it's better to view gold investing as a long game rather than a get-rich-quick ploy.

The bottom line

Gold investing may not be at the top of your list right now, but there are plenty of times when it's worth it to consider investing in this precious metal. Before you jump into buying gold bars and coins, do your research and make sure it's the right move for your portfolio. You won't see quick gains on your investment in physical gold, but it can still be an excellent tool to add to your investing strategy.

Learn more about gold investing here now with a free information kit.