When you buy precious metals, you can actually buy the physical metals (either to store yourself or to be stored in a remote vault) or buy investment products that may or may not eventually involve actual metal. Your choice is often determined by why you want to buy the metal in the first place; however, there are other considerations. Buying precious metals can be simple, but it can also be confusing for those new to it because so many different issues come into play.

Are You Buying for Investment or Protection?

People typically buy gold for at least one of three main reasons. One, they like gold and they want to have some; maybe they want to collect gold coins from every country or they like gold jewelry. Two, they want to have some sort of hedge against inflation and by having gold coins or other gold items, they can let their money grow as the price of gold goes up and then cash in. The gold can also supposedly keep them financially afloat should the dollar tank. The third reason is purely about investment. Some people buy gold so that their wealth grows as the price of gold increases. These investments may be traded and treated like stocks or commodity futures. If your goal in buying a precious metal like gold is to have some protection against inflation, physical gold is better. If your goal is to use gold as an investment tool for the next several years, then an investment product might be more to your liking.

Long-Term Strategies vs. One and Done

Are you looking at buying precious metals as a long-term investment strategy, or do you prefer a one-and-done type of purchase that you can repeat when you want? If you want long-term strategies, either investment products or physical bullion will do. But if you are that person who just wants to get something and let it sit, gradually gaining in value, buying physical coins or bars that you hold at your home or in a safe deposit box is what you need to do.

Don't Worry About the Gold Standard

As you search for gold products to buy, you may come across essays discussing the return of the gold standard, which is the system that many countries used to use where the value of their money was pegged to the value of gold. In the past, when gold prices were stable, the gold standard wasn't a problem. But when the price of gold became volatile, that made the value of money and inflation and deflation change wildly, yet governments couldn't do much to stop the changes. Eventually, governments stopped using the gold standard, but there's been a movement to bring it back. This has led some investors to advocate for buying gold as a way to stock up in anticipation of a return.

You shouldn't let this influence your decision of whether to buy physical gold or non-physical investment products. There's nothing wrong with having some gold on hand, but don't ignore the non-physical products and other investment methods solely to concentrate on a return to a gold standard that may not ever happen.

It helps to speak with investment advisors who focus on precious metals and who can explain how things like futures work. Whether you want gold on hand or just want to concentrate on futures and other products, an investment advisor can be of great help.

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