Why physical gold remains a smart investment, according to experts
Gold prices rose throughout 2024, reaching a record high of $2,790 per ounce in October before cooling in November. Despite this slight pullback, financial experts continue to recommend physical gold as a strategic investment.
Physical gold has long attracted investors for its tangible value. "When fiat currencies lose value, precious metals often retain their worth, providing a store of wealth for investors," explains Daniel Boston, founder of Preserve Gold. Unlike digital assets and paper investments, it provides something concrete that holds worth even during market downturns.
With gold trading near historic highs, you may question the timing of investing in the precious metal. Three industry professionals make a strong case for buying gold bars and coins now, pointing to enduring benefits beyond price fluctuations. Below, they share why physical gold investment can be smart and how to pick the right form for your portfolio.
Learn more about how gold could benefit your portfolio today.
Why physical gold remains a smart investment, according to experts
Experts say investors reap these five key benefits when they invest in physical gold:
It's an effective hedge against inflation and currency fluctuations
Physical gold has historically been a safeguard when currencies weaken and inflation rises. The precious metal holds unique advantages over traditional paper-based investments in protecting wealth.
"The value of gold increases as more money is created and the supply of gold [stays] static," says Tom Bruce, macro investment strategist at Tanglewood Total Wealth Management.
This protective quality becomes vital when economic pressures mount, preserving purchasing power while currencies decline. Many investors rely on gold to protect their savings during these challenging periods.
Find out how to start investing in gold now.
It has intrinsic value and a limited supply
Gold's value comes from its genuine scarcity. According to the U.S. Geological Survey, only about 244,000 metric tons of gold exist. Unlike currencies, governments can't simply produce more gold.
Precious metals also maintain real-world worth beyond their investment value. "[They] have intrinsic value due to their demand in various industries, including jewelry [and] electronics," notes Boston. This practical utility supports gold's market value through different economic cycles.
It has a strong demand from central banks
"With central banks worldwide continuing to accumulate gold, the demand remains strong," says Boston. "This trend, combined with limited supply due to mining constraints, can drive prices higher over time."
Among central banks, the U.S. holds the largest gold reserves. "[They have] approximately 8,133.46 metric tons," highlights Ronen Cojocaru, personal financial consultant and CEO of 8081.io. Such massive institutional backing demonstrates gold's importance in national finance.
Recent global economic shifts have only strengthened gold's appeal.
"Central banks have significantly increased their gold reserves [to protect their national wealth]," Bruce points out. The growing commitment from these powerful institutions creates lasting market stability.
It's a reliable asset in uncertain times
Precious metals such as gold tend to perform well during market volatility as investors seek stability, according to Boston. The growing focus on sustainable investing has made responsibly sourced gold even more attractive.
Also, gold's value remains steady while other investments fluctuate. "When stocks, real estate and crypto become unpredictable, gold retains its value and provides security," says Cojocaru. The numbers back up this stability — gold prices rose from $1,199 per ounce in 2014 (close price) to over $2,700 in 2024, showing solid long-term growth.
It can be a great portfolio diversifier
Gold is valuable for portfolio balance. Bruce and Cojocaru emphasize it has a remarkably low correlation with stocks and bonds. When other investments struggle, this precious metal often maintains its strength, reducing exposure to market swings.
The bottom line
Physical gold's stability and lasting value make it a powerful investment tool in any market. When deciding between gold bars and coins, think about your investment preferences and goals. "Gold coins are often a better starting point because they're highly liquid and easier to trade in smaller denominations," advises Bruce. Their worldwide recognition and portability make them practical for beginner investors.
On the other hand, gold bars typically offer better value for larger investments. They come with lower premiums, especially in bigger sizes, according to Cojocaru. But he cautions that bars can be harder to sell in portions and require secure storage (which could eat into your returns).
Experts suggest visiting trusted gold dealers, consulting a financial advisor and starting modestly with well-known coins or smaller bars. As your comfort grows, you can expand your holdings based on your storage capabilities and investment needs.
