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Buy physical gold

The most direct way to invest in gold is to buy physical gold in the form of bars, coins or jewelry.

Gold is often tipped as a great alternative asset to invest in because, unlike the U.S. dollar, which has lost 98% of its purchasing power since 1971, gold’s purchasing power remains more stable over time.

In 2023, central banks worldwide have been ditching their dollar reserves in favor of gold — proof that this strategy is not just for the individual investor.

In the first quarter of this year, central banks added 228.4 tons of gold — a new quarterly record — to their reserves, according to the World Gold Council.

The price of gold does fluctuate. Historically, when interest rates have fallen, the price of gold has risen, based on the theory that paper money may lose value, leaving gold with a stronger purchasing power. That past performance can be used as an indicator, though not a guarantee, for what’s to come.

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Invest in gold stocks and ETFs

You can invest in gold without ever touching a flake of it by purchasing shares of gold mining companies on the stock market.

The advantage is that if the price of gold suddenly plummets, you may not lose your shirt because the mining company could decide to focus on another metal.

The disadvantage of owning mining stocks is that they can decline with the rest of the market, even when the value of gold is steady. In fact, business factors can always come into play — factors like the company’s financials, the quality of its management team and long-term production prospects.

Investors might also buy into gold exchange-traded funds (ETFs) — some of the most popular options are GLD, GDX and GDXJ — to diversify their portfolio and avoid the uncertainty that comes with investing in a particular company.

Although these funds are heavily diversified to reduce risk, there's still a measure of uncertainty when investing in ETFs and they remain subject to the fluctuations of the stock market. If the market crashes, the value of your investment could drop even if the value of gold doesn’t change.

A golden retirement option

The U.S. dollar saw an 8% decline in its share of global reserves in 2022 — causing some to question whether the dollar’s days of dominance are over.

If you’re worried about how economic volatility, high inflation and stock market uncertainty could be impacting your own dollars — especially your retirement fund — you might want to consider opening a gold IRA.

This type of individual retirement account (IRA) allows you to invest in gold and other precious metals in physical forms, such as coins, instead of stocks, mutual funds and other traditional investments.

Opting for a Gold IRA gives you the opportunity to both diversify your portfolio and stabilize your finances — and they typically boast some enticing tax advantages that can help you hold onto more of your money in the long run.

If you want to open a Gold IRA, there are reputable services like Birch Gold Group that’ll let you roll over your current 401(k) or IRA into this new account, subject to certain qualifications.

With files from Sigrid Forberg

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Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.


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