For centuries, gold has been in demand for numerous reasons — ranging from its dense yet malleable composition and ability to avoid corrosion, which has helped fuel its use in items such as electronics, to its relative scarcity.
As a natural resource, only so much gold exists in the world; and the amount that’s mined and put into circulation each year is limited, due to production constraints. In tandem with the other factors that have contributed to the interest in gold, its limited availability has helped the precious metal retain value over time.
While economic challenges — such as an increase in inflation in the U.S. — can have a significant effect on assets like stocks, gold and other precious metals have traditionally shown less volatility than a number of equity indices and commodities.
Gold, for instance, has historically performed well during both periods of growth and economic decline, according to World Gold Council research.
The precious metal is known for generally serving as an effective hedge against inflation, says Everett Millman, precious metals specialist at Gainesville Coins.
“Gold has steadily climbed in value and kept pace with inflation for thousands of years,” Millman says.
As a result, a number of investors have chosen to include physical gold assets in their portfolio. Some, according to Millman, view it as a type of protection against the impact of potential issues with the financial and banking system.
“People buy insurance for disaster scenarios they can’t predict or control; that’s what gold is as an investment,” he says. “The tried-and-true things that appeal to investors — [having] a guaranteed cash flow, or insulation against inflation — gold meets these requirements.”
Gainesville Coins on How to Begin Buying Gold
Gold prices have reached record high points multiple times this year, as Gainesville Coins’ price charts show, topping $2,700 for the first time in October.
However, investors who are worried they may have been priced out of the market might be surprised to find out it’s more accessible than they think, Millman says — particularly if they’re open to buying gold bars that are a few grams or less.
“Anyone can get started buying gold and silver on a budget of less than $100,” he says. “The barrier to entry is not as strong as a lot of people might think, if someone wants to start very small with buying gold by the gram.”
Cost-conscious investors can also use a dollar-cost averaging strategy, Millman says, when purchasing gold or silver.
“That allows them to consistently buy a set dollar amount each time-period — each week, each month, whatever timeframe they choose — [and] helps smooth out the ups and downs of price fluctuations,” he says. “Even if it was small amounts [and] they [were] only spending $50 to $100 per purchase, they would still have been able to take advantage of some of the lower prices earlier in the year. You will end up with slightly less gold now because prices have gone up — but you can still consistently stack small amounts of gold for less than $100.”
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